Oil prices jump $5 on Iranian missile test tensions; stocks post gains
— -- Oil prices rebounded by more than $5 a barrel Thursday, as another missile launch by Iran stoked worries that escalating political tensions in the Middle East could cut off supplies out of the region.
A day after Iran tested a missile capable of reaching Israel, Secretary of State Condoleezza Rice warned the oil-producing nation that the United States will defend its allies. Iran then responded with another missile launch.
Meanwhile, stocks stumbled through another volatile session but ended with a respectable gain Thursday after a multibillion dollar deal between Dow Chemical and rival Rohm and Haas helped offset concerns about the financial sector and the rising price of oil.
The mounting hostilities drew buyers back into the jittery energy markets, said John Kilduff, senior vice president of risk management at MF Global.
"We fell awfully fast, awfully far," Kilduff said, "and these Iranian tensions are putting a higher and higher floor under this market."
After falling by nearly $10 a barrel on Monday and Tuesday, light, sweet crude for August delivery soared $5.60 to $141.65 a barrel on the New York Mercantile Exchange. It was crude's largest daily leap since June 6, when the July contract jumped by $10.75 a barrel.
On Wednesday, oil prices had seesawed before settling a penny higher at $136.05, ending two days of sharp declines that left prices well below last Thursday's record trading high of $145.85 a barrel.
OPEC's secretary general said Thursday that the oil producing group will not be able to replace any shortfalls if Iran is attacked and takes its crude supplies off the market. Iran has control over the Strait of Hormuz, a passageway that handles about 40% of the world's tanker traffic.
Meanwhile, attacks on Nigerian oil facilities could again disrupt supplies in that oil-rich region. On Thursday, Nigeria's main militant group vowed to resume attacks because of Britain's recent pledge to back the government in the conflict there. Attacks by the Movement for the Emancipation of the Niger Delta over the past two years have already slashed the country's normal daily oil output by a quarter.
