The Enemy of Mankind is Israel
AP
Tuesday July 1, 11:46 am ET By Adam Schreck, AP Business Writer
Oil climbs above $142 a barrel on concerns about tight global supplies, Mideast conflict
NEW YORK (AP) -- Oil prices pushed back above $142 a barrel Tuesday on worries about tight supply and possible armed conflict between Iran and Israel. In the U.S., gasoline edged to a new record high.
Prices resumed their advance as the International Energy Agency issued a report cautioning that worldwide crude supplies are unlikely to ease despite record prices and falling demand in industrialized countries. The world is experiencing "the third oil price shock," the head of the Paris-based body said, comparing the effects of today's pricey petroleum to times of soaring prices in the 1970s and 1980s.
OPEC production is at record highs and non-OPEC producers are working at full throttle, but stocks show no unusual build," IEA chief Nobuo Tanaka said at the report's presentation in Madrid. "These factors demonstrate that it is mainly fundamentals pushing up the price."
U.S. Treasury Secretary Henry Paulson echoed those concerns in Berlin, saying that there were no "obvious short-term solutions" to soaring oil prices.
Light, sweet crude for August delivery rose $2.02 to trade at $142.02 a barrel on the New York Mercantile Exchange.
On Monday, the contract soared to a record $143.67 a barrel. It later fell back to close at $140 as traders took profits and settled their positions at the end of the quarter.
In the U.S., gas station operators nudged the record for a gallon of regular a tenth of a penny higher, to an average of $4.087 a gallon nationwide, according to AAA, the Oil Price Information Service and Wright Express.
Concerns about ongoing tension in the Middle East -- a factor that has helped fuel oil's recent rise -- continued to weigh on traders' minds Tuesday.
ABC News quoted an unnamed senior Pentagon official as saying there is an "increasing likelihood" that Israel will strike Iran's nuclear facilities before the end of the year. Such an attack could prompt Iran to retaliate, potentially disrupting oil supplies in the strategically vital Persian Gulf.
Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates in Galena, Ill., called the report "more of the same" but acknowledged it was having an effect on energy market psychology.
"The market's forced to insert some type of risk premium on geopolitical developments," he said.
Iran is the world's fourth-largest oil exporter and OPEC's second-largest exporter. About 40 percent of world oil exports pass through the Gulf.
In its Medium-Term Oil Market Report on Tuesday, the Paris-based IEA said demand would rise most in developing countries, with Asia, the Middle East and Latin America accounting for nearly 90 percent of demand growth over the next five years.
Victor Shum, an analyst with Purvin & Gertz in Singapore, predicted concerns about supply, including worries about conflict with Iran, will likely keep prices high.
"I don't see much resistance to $150 (a barrel), which could happen in the coming weeks."
In other Nymex trading, heating oil futures were up about 6 cents to $3.9705 a gallon, while gasoline futures rose 3.84 cents to $3.5375 a gallon. Natural gas futures jumped 18.8 cents to $13.541 per 1,000 cubic feet.
In London, Brent crude futures rose $2.27 to $142.10 on the ICE Futures exchange.
Associated Press writers Alex Kennedy in Bangkok, Thailand, George Jahn in Madrid, Spain, and Pablo Gorondi in Budapest, Hungary contributed to this report.
