Crude hits a record $147

Tensions in Mideast, Nigeria and Brazil contribute to rise

From wire reports

July 12, 2008

NEW YORK - It's only July, but it might be time to start loading up on blankets and sweaters. Oil spiked to another trading record as hostilities rise between the West and Iran - raising the likelihood that this winter's heating bills will be the priciest yet.

Crude oil's brief jump past $147 a barrel yesterday arrived not only as the United States and Israel view Iran as a growing threat, but also as the U.S. dollar fell and worries erupted over possible supply disruptions in two other major oil-producing nations: Nigeria and Brazil.

Those factors contributed to all-time trading highs in crude, gasoline and heating oil. Light sweet crude for August delivery soared to $147.27 a barrel before settling at $145.08, up $3.43. That's slightly below July 3's settlement record of $145.29 a barrel.

It looks like $4-a-gallon gasoline might be here to stay, and that heating oil costs might cause further problems for consumers as the weather gets colder. Futures prices for natural gas turned lower yesterday, but are still about twice as high as a year ago.

"If you think your gasoline bills are expensive now, wait till you get your home heating bill this winter," said Stephen Schork, an analyst and trader in Villanova, Pa.

Heating oil is used mostly in the Northeast; homes in most other parts of the country use natural gas. It's possible for people to cut back on heating as they do on driving, but it's not easy to slash the bill significantly.

"We've been building these ridiculous McMansions over the past few years. It's harder to trade in a McMansion than it is an SUV," Schork said. "But you can turn your thermostat down and throw on a sweater."

Political unrest in oil-producing regions - along with production cutbacks by refineries and fairly resilient demand for diesel fuel - have been keeping energy costs high.

Iran, which has long been under United Nations scrutiny for its uranium enrichment program, has been testing missiles this week, including a new missile capable of reaching Israel.

Then yesterday, there were rumors that Israeli warplanes had used Iraqi air space and U.S. air bases to practice for a possible attack on Iran's nuclear facilities. The rumors were reportedly denied by Israeli officials.

Iran pumps about 4 percent of the world's oil, and about 40 percent of the world's tanker traffic passes through the Strait of Hormuz, at the mouth of the Persian Gulf.

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Crude hits a record $147

Tensions in Mideast, Nigeria and Brazil contribute to rise

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