Geopolitical tensions kick oil prices higher

Crude oil prices turned higher Thursday, mostly due to heightened worries about geopolitical issues in Africa and the Middle East.

The Movement for the Emancipation of the Niger Delta, the main militant group in Nigeria, announced an end to its ceasefire in response to a statement from Britain that it will support the government of Nigeria against the militants, raising fears of more attacks against oil facilities in the African nation.

In addition, Iran test-fired more long-range missiles in the course of war games it is carrying out in the Persian Gulf, a day after it tested nine missiles, which brought a declaration from US Secretary of State Condoleezza Rice that the US will defend its allies in the region.

Meanwhile, the Secretary General of the Organization of Petroleum Exporting Countries said his group will not be able to replace Iranian oil if Iran takes its oil off the market in response to an attack.

Besides a potential loss of Iranian supplies, there are also worries that the Strait of Hormuz will be closed in the event of a conflict involving Iran, shutting off some supplies from other oil producers in the region.

West Texas Intermediate crude oil for August delivery added $5.60 to $141.65 per barrel on the New York Mercantile Exchange after going as high as $142.04 per barrel earlier in the session, while August contracts for Brent crude was up $4.79 to $141.37 per barrel on the ICE Futures Europe exchange in London.

Nymex August gasoline added 13 cents to $3.51 per gallon while August heating oil jumped 18 cents to $4.03 per gallon and August natural gas gained 29 cents to $12.30 per million British thermal units after the US Energy Department said that while there were gains in the amount of natural gas in storage was up in the week ending 4 July, inventories remain 3.1 percent behind this time last year.