Crude oil futures surged by more than $3 a barrel yesterday to a new record above $143, over market fears that Israel was planning to attack Iran's nuclear sites.
Crude oil futures surged by more than $3 a barrel yesterday to a new record above $143, over market fears that Israel was planning to attack Iran's nuclear sites.
Prices later retreated from session highs, but remained near record levels.
US light crude settled down 21 cents at $140.00 a barrel, after soaring to a record high of $143.67. North Sea Brent crude finished 48 cents down at $139.83 in London dealing.
Yesterday's sharp rise in crude prices fanned fears of higher inflation and depressed share prices on Wall Street and other equity markets.
"There are many high-level geopolitical news items, particularly in the Middle East, that are pushing prices up," said Mark Pervan, a senior commodities analyst at the Australian & New Zealand Bank.
Iran's Revolutionary Guards have said that Iran would impose controls on shipping in the Persian Gulf and Strait of Hormuz if it were attacked.
The Strait of Hormuz, a narrow waterway separating Iran from the Arabian Peninsula, accounts for roughly 40% of the world's traded oil flows.
Iran's foreign minister said he did not believe that Israel was in a position to attack his country over its nuclear programme, but Israeli aircraft recently held war manoeuvres in the eastern Mediterranean, several hundred kilometres from their bases, in a demonstration of the Jewish state's military capabilities.
At least two cabinet ministers in Israel have strongly suggested in recent comments that their country may have to launch an attack on Iran to prevent the Islamic republic from developing atomic weapons.
Iran's dispute with the West over its nuclear development programme is just one of many factors behind the surge in oil prices to record peaks.
Oil has risen more than 40% this year, extending a six-year rally, in response to the Middle East tensions, plus forecasts that supply will struggle to keep pace with rising demand from booming emerging economies such as China and India.
