Reuters/AP NEW YORK
OIL prices hit a record above $145 a barrel on Thursday ahead of the Independence Day holiday weekend in the US before paring gains as the dollar recovered from a two-month low.
US light sweet crude oil for August delivery was trading at $144.35 a barrel, up 78 cents at 00.20 am IST, after earlier hitting a record $145.85. London Brent was trading $1.03 higher at $145.29 after reaching $146.69 a barrel.
"We pushed to a new high early and then backed off from that on some light profit-taking ahead of the long weekend that was encouraged by the strength that we've seen in the US dollar," said Tim Evans, energy analyst for Citi Futures Perspective in New York. US payroll data released on Thursday suggested the job market had not deteriorated as much as many investors had feared, helping the dollar recover from a two-month low against the euro hit earlier in the day.
Comments from the head of the European Central Bank that suggested further interest rate increases in Europe could be put on hold also supported the greenback.
Oil has risen nearly 13% since the start of June on concerns about Middle East tensions, tight supplies and investors buying crude as a hedge against inflation and the falling value of the dollar.
Saudi oil minister Ali al-Naimi reiterated his belief on Thursday that the current rally in oil prices was being propelled by speculators rather than any shortage of crude oil. Naimi repeated promises that Saudi Arabia would pump more oil if there was demand for it. Oil refiners in the US and Asia have said official Saudi prices make it uneconomical to buy more barrels.
Iran has threatened to block oil shipments through the Strait of Hormuz in the event it is attacked. Speculation has mounted in recent weeks that Israel may be preparing a preemptive strike against Tehran's nuclear program.
Approximately 40% of the world's seaborne crude oil trade passes through the Strait of Hormuz.
Tropical Storm Bertha, which formed on Thursday in the eastern Atlantic Ocean, was not expected to strengthen into a hurricane or threaten any US oil and gas production facilities in Gulf of Mexico.
Meanwhile, Opec oil exporting group secretary general said it would be difficult to replace the crude output of Iran if the country was attacked, in a comment published on Thursday.
"If something happened in Iran, it is difficult to replace 4.1 or 4.2 million barrels a day," Abdallah El-Badri told the World Petroleum Congress in Madrid. "The price (of crude) of course will go up," he added
There has been a surge in speculation recently that Israel might be planning a military strike against Iran's nuclear sites after Israeli fighter planes carried out practice runs. Iran has been locked in a fiveyear standoff with the west over its nuclear programme, which it says is for generating electricity while western powers fear the development of nuclear weapons.
"Iran, if there were any kind of activity of any sort, is not going to be quiet and would react fiercely," Iranian oil minister Gholam Hossein Nozari said, when asked what Tehran would do in the event of an attack.
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