Oil rockets to $146 for first time

NEW RECORD: Oil surged past $146 per barrel for the first time on Thursday as the weak US dollar and Middle East tension stoked crude's record-breaking run. (Getty Images)

London's Brent crude oil hit $146 a barrel for the first time on Thursday, as traders reacted to Middle East tensions, falling US crude reserves and the weak dollar.

Brent North Sea oil for August delivery surged to a life-time peak of $146.34.

New York's main oil contract, light sweet crude for August delivery, meanwhile surged past $145 for the first time to reach an all-time pinnacle of $145.43 a barrel.

The latest surge followed a warning from Iranian Oil Minister Gholam Hossein Nozari that his country, a key crude producer, would react fiercely to any attack against it.

"Iran, if there were any kind of activity of any sort, is not going to be quiet and would react fiercely," he told reporters on the sidelines of the World Petroleum Congress in Madrid.

He said oil prices, which have been driven to record levels partly because of fears about the loss of Iran's oil output, would rise radically if Israel or the United States launched a military strike.

"That's the kind of talk that kind of juices the market," said Jason Feer, vice president and general manager, Asia Pacific, for energy market analysts Argus Media Ltd. in Singapore.

Western powers and Iran have been engaged in long-running efforts to resolve a stalemate over Iran's nuclear enrichment programme, which the West fears could be used to make an atomic bomb.

Iran, the world's fourth largest oil producer, says its nuclear programme is for peaceful purposes.

The Iranian tensions, along with unrest which has cut output in key African producer Nigeria, and the weaker US currency were among factors combining to push prices higher, Feer said.

"It's the ongoing perfect storm, basically," he said.

The dollar slumped to a two-month low against the euro on Wednesday and held steady in Asian trade on Thursday. A weaker dollar makes commodities like oil denominated in the greenback more affordable for buyers with stronger currencies.

OPEC secretary general Abdallah El-Badri said in an interview published Wednesday that US authorities should stop "harassing" members of the Organisation of the Petroleum Exporting Countries (OPEC) cartel.

He argued that sky-high oil prices were not due to "the myth" of the lack of supplies, as Western nations contend, but to speculation sparked by a crisis in the US subprime mortgage sector.

Global oil prices have doubled in the past year and have risen by 45 percent since the start of 2008, when they breached 100 dollars for the first time, triggering fears over inflation and slower economic growth.

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