Saturday, June 7, 2008

Israel-Iran tension drives up Oil prices to all time high

An Israeli attack on Iranian nuclear sites looks "unavoidable" given the apparent failure of sanctions to deny Tehran technology with bomb-making potential, one of Prime Minister Ehud Olmert's deputies said on Friday.

"If Iran continues with its program for developing nuclear weapons, we will attack it. The sanctions are ineffective," Transport Minister Shaul Mofaz told the mass-circulation Yedioth Ahronoth newspaper.

"Attacking Iran, in order to stop its nuclear plans, will be unavoidable," said the former army chief who has also been defense minister.

It was the most explicit threat yet against Iran from a member of Olmert's government, which, like the Bush administration, has preferred to hint at force as a last resort should U.N. Security Council sanctions be deemed a dead end.

This along with weaking US dollar, prompted a sudden spike in oil prices to USD 138 per barrel.U.S. crude oil prices rose more than $9 a barrel to a record $137.70 a barrel, the biggest gain in dollar terms in the history of the market.

Investment bank Morgan Stanley, one of Wall Street's biggest energy traders, was even more bullish, saying on Friday that crude may reach $150 by July 4 due to robust Asian demand and falling inventories.

Oil prices have surged six-fold since 2002 as surging demand and a weakening dollar have attracted billions of dollars in cash from short-term speculators to longer-term investors such as pension funds

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