Oil prices jumped $5 to a record high above $147 a barrel on Friday amid growing worries about threats to supplies from Iran and Nigeria and a strike by Brazilian oil workers next week.
Analysts said oil’s rally could run further if problems with U.S. mortgage companies Fannie Mae and Freddie Mac feed into the commodities boom by reducing the chances of an interest rate hike by the U.S. Federal Reserve.
The troubles with the mortgage giants -- which control $5 trillion in debt -- helped pare crude’s gains after it hit new highs as dealers focused on U.S. economic turmoil that has already slowed oil consumption in the world’s top energy user.
U.S. crude settled at $145.08 a barrel, up $3.43, after climbing as high as $147.27 earlier in the day and adding to gains of $5.60 from Thursday. London Brent crude settled at $144.49 a barrel, up $2.46.
"I’m seeing profit-taking here after the run-up to a new record, but we are going into a weekend and with all these things being reported on Iran, you wouldn’t want to go short," said Daniel Flynn, an analyst at Alaron Trading.
In addition, Iraq’s Defense Ministry said on Friday that it had no knowledge of Israeli air force drills in its airspace, contrary to a media report carried on the Jerusalem Post website that sparked crude early Friday. An Israeli security source also said the report was wrong.
"As martial rumors are denied, participants are reverting their gaze on the deteriorating global economy," said Mike Fitzpatrick, vice president at MF Global in New York.
Missile tests this week by Iran, against a backdrop of rising tensions with Israel and the United States, has left the oil markets worried about a potential supply disruption from the world’s No. 4 exporter.
Iran has threatened to strike back at Tel Aviv and U.S. interests in a key oil shipping route if it is attacked over its nuclear program, which Israel and the West fear is aimed at making weapons.
Support also came from supply threats in Nigeria and Brazil. The main militant group in OPEC nation Nigeria’s oil-producing region said it was abandoning a cease-fire to protest against a British offer to help tackle lawlessness.
Workers at Brazil’s Petrobras plan to launch a five-day strike on Monday that would affect all 42 Campos basin offshore platforms, which pump than 80 percent of the nation’s 1.8 million bpd of output.
Oil prices have risen seven-fold since 2002 amid surging demand from China and other emerging markets, and jumped 50 percent this year alone, battering the economies of consumer nation’s already hit hard by the global credit crunch.
Concern in the United States that Fannie Mae and Freddie Mac could run short of capital added to inflation worries. Analysts said the U.S. Federal Reserve could be hindered in any efforts to raise interest rates by the problems.
"Mounting anxiety about the health of Fannie and Fred now effectively guarantees the Fed will remain on the sidelines for the next few months -- whatever happens to inflation," said John Kemp, commodities analyst at RBS Sempra in London.
Investors also have flocked to oil and other commodities this year as a hedge against inflation and a weak dollar.
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