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Oil sets new record above $147 a barrel

(Agencies)
Updated: 2008-07-11 22:56

NEW YORK -- Oil prices spiked to a new record above $147 a barrel Friday, as rising hostilities between the West and Iran and the potential for attacks on Nigerian oil facilities gave investors reason to rush back into the energy markets.

Related readings:  Oil reserve decline is reason behind oil price hike  Efficient oil use vital for sustainable growth  Israel hints at readiness to strike Iran  Iran tests missiles, vows to hit back

The resurgence in crude prices not only raises the concern that $4-a-gallon gasoline is here to stay for US drivers -- it also means that heating American homes could get significantly more expensive this winter. Heating oil futures surged on the New York Mercantile Exchange to a record of more than $4.15 a gallon, and natural gas also rose sharply.

Iran, which has long been under UN scrutiny for its uranium enrichment program, has been testing missiles this week, including a new missile capable of reaching Israel. On Thursday, Secretary of State Condoleezza Rice warned the oil-producing nation that the United States will defend its allies, and Iran responded with another missile launch.

Light, sweet crude for August delivery jumped $4.69 to $146.34 a barrel in early trading on the Nymex, after reaching an all-time high of $147.27.

Crude had fallen by nearly $10 a barrel over two days at the start of the week, but rebounded by more than $5 a barrel Thursday as anxiety heightened about Middle East and Nigerian supplies being disrupted.

Neither the United States nor Israel has ruled out a military strike on Iran. Traders fear the oil producing nation could block the Strait of Hormuz, through which about 40 percent of the world's tanker traffic passes.

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