NEW YORK — Oil rushed to record over $145 a barrel on Thursday ahead of the US Independence Day holiday, extending a rally that has added 50 percent to prices this year.
Escalating tensions between Israel and OPEC nation Iran have pushed prices to fresh peaks over the past two weeks, with further support coming from speculators hedging against inflation and a weakening dollar.
The US oil settled $1.72 higher at $145.29 a barrel after hitting an all-time intraday high of $145.85. London Brent settled at $146.08, up $1.82 after reaching an intraday record of $146.69 a barrel.
"On a long weekend, no one wants to take the risk of being caught short with all the tension between Iran and Israel," James Crandell, analyst at Energy Research in New York.
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 percent of the world's seaborne crude oil trade passes through the Strait of Hormuz.
The new crude oil record came just ahead of the Fourth of July holiday weekend, traditionally the peak driving period for motorists in the nation's largest oil consumer.
Oil has risen nearly 13 percent 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.
Crude futures have surged seven-fold since the start of 2002 as supply struggles to keep pace with demand from emerging nations like China. The price spike has caused fuel protests around the globe and hurt demand in consuming nations like the United States.
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 United States and Asia have said official Saudi prices make it uneconomical to buy more barrels.
US payroll data released 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.
Tropical Storm Bertha, which formed on Thursday in the eastern Atlantic Ocean, was not expected to threaten any US oil and gas production facilities in Gulf of Mexico.
Hurricane experts have predicted an above-average number of storms and hurricanes through the US hurricane season, which began June 1 and runs through the end of November.
