Oil hits record above US$147 on Iran, Nigeria

Source: Agencies  |   2008-7-12  |     ONLINE EDITION

OIL prices jumped US$5 to a record high above US$147 a barrel yesterday amid growing worries about threats to supplies from Iran and Nigeria and a strike by Brazilian oil workers next week.

Analysts said oil's rally could run further if problems with US mortgage companies Fannie Mae and Freddie Mac feed into the commodities boom by reducing the chances of an interest rate hike by the US Federal Reserve.

The troubles with the mortgage giants -- which control US$5 trillion in debt -- helped pare crude's gains after it hit new highs as dealers focused on US economic turmoil that has already slowed oil consumption in the world's top energy user.

US crude settled at US$145.08 a barrel, up US$3.43, after climbing as high as US$147.27 earlier in the day and adding to gains of US$5.60 from Thursday. London Brent crude settled at US$144.49 a barrel, up US$2.46.

"I'm seeing profit-taking here after the run-up to a new record, but we are going into a weekend and with all these things being reported on Iran, you wouldn't want to go short," said Daniel Flynn, an analyst at Alaron Trading.

In addition, Iraq's Defense Ministry said on Friday that it had no knowledge of Israeli air force drills in its airspace, contrary to a media report carried on the Jerusalem Post website that sparked crude early Friday. An Israeli security source also said the report was wrong.

"As martial rumors are denied, participants are reverting their gaze on the deteriorating global economy," said Mike Fitzpatrick, vice president at MF Global in New York.

Missile tests this week by Iran, against a backdrop of rising tensions with Israel and the United States, has left the oil markets worried about a potential supply disruption from the world's No. 4 exporter.

Iran has threatened to strike back at Tel Aviv and US interests in a key oil shipping route if it is attacked over its nuclear program, which Israel and the West fear is aimed at making weapons.