Grant Smith and Nesa Subrahmaniyan
Wednesday, July 9, 2008
Crude oil rose, rebounding from its biggest decline in three months, after Iran test-fired a long- range missile capable of reaching Israel and the dollar fell.
Oil recovered as the Iranian exercise, reported on state television, heightened concerns of an attack by Israel on the Middle East’s second-biggest oil producer. The dollar dropped against the yen and euro after the missile test, making commodities priced in the U.S. currency cheaper.
“While we’re still in a phase of verbal attacks, the danger of military strikes is real and Iran might halt its oil exports,” said Gerrit Zambo, a trader at BayernLB in Munich. “This is driving the oil price up and the situation remains tense.”
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Crude oil for August delivery rose as much as $2.24, or 1.7 percent, to $138.28 a barrel in electronic trading on the New York Mercantile Exchange. It traded at $137.67 at 11:15 a.m. London time. Yesterday, prices tumbled 3.8 percent, the biggest decline since March 31.
Futures reached a record $145.85 on July 3. Prices have surged 91 percent in the past year.
Iran’s move comes a day after Ali Shirazi, an aide to Iran’s Supreme Leader Ayatollah Ali Khamenei, warned that the Middle Eastern nation would strike Israel and the U.S. Navy in the Persian Gulf as a first response to any American attack on its nuclear program. The U.S. has accused Iran of uranium enrichment to develop nuclear weapons, while the Persian Gulf nation has said it’s for electricity production.