MercoPress. South Atlantic News Agency

Oil keeps breaking records: 16 dollars jump in two days

The oil price rebounded on Friday to gain over ten dollars a barrel to almost 139 while US stock prices plummeted following the report of a sharp rise in unemployment. Oil soared after Israel raised the specter of an Israeli military strike on Iran and reports that it could reach 150 US dollars a barrel by July.

In New York crude oil rose 8%, 10.75 US dollars following a 5% gain on Thursday, bringing oil's two-day advance to a stunning 16 US dollars. On Wall Street the Dow Jones Industrials lost 395 points, their biggest drop in 14 months and the eighth biggest fall ever. The Dow average closed at 12,210, a sharp 3% loss on the day. The stock market decline began at the open when the US Labor Department reported that the US jobless rate in May rose by .5 percent to 5.5%, the biggest monthly rise in the jobless rate in over 20 years. The US economy grew at a 0.9% rate in the first three months of the year and since the year began over 330,000 US workers have lost their jobs. While technically not in recession, many analysts believe the economy has entered a period of decline. The US economy is being hammered by rising fuel and food prices, a continuing credit squeeze, sluggish growth, a weak job market and declining home prices. The price of gasoline, a major expense for US consumers, is up over 50% in the past year Oil prices were given a boost on a report by Morgan Stanley analyst Ole Slorer, who suggested the price of oil could rocket to 150 US dollars as early as July. Some analysts have suggested that prices would reach as high as 200 a barrel during the next 18 months. The price of the benchmark light, sweet crude oil has already seen rapid gains over the past months and has gained more than 40% over the year which is more than twice the price it was a year ago. The market was also responding to a statement by Israel's transport minister that an attack on Iran was "unavoidable" after sanctions to prevent Tehran from developing its nuclear capability had failed. "If Iran continues its nuclear weapons program, we will attack it," he told the daily Yediot Aharonot newspaper. Investors hedging oil against the weak dollar has also pushed up the price of oil. Fears that workers at Chevron Corporation in Nigeria may go on strike and subsequently disrupt production and access to oil are also adding to market jitters. The International Energy Agency (IEA), an advisor to 27 industrialized countries, had said it could lower its 2008 demand growth projection further, after having already more than halved it to 1.03 million barrels per day.