Crude prices breached $76 for the first ever time today as Israel pressed on with an offensive in Lebanon while key producer Iran remained defiant in the face of Western pressure to rein in its nuclear ambitions.
This afternoon, New York's main contract, light sweet crude for delivery in August, hit a record $76.40 in pit trading and Brent North Sea crude for August delivery also struck a record $76.23 per barrel in electronic dealing.
Israel killed at least 40 Lebanese in dozens of air strikes across the country on Thursday after Hezbollah militants seized two soldiers and killed eight, local police said, opening a new front in the Middle East crisis.
Israeli warships have also been sent into Lebanese waters while Beirut international airport was forced to closed after its runways were attacked by Israeli jets.
The Israeli strikes added to tensions arising from Iran's defiance of Western pressure to rein in its nuclear ambitions, dealers said.
Iranian President Mahmoud Ahmadinejad warned today that Tehran could halt UN inspections and quit the nuclear Non-Proliferation Treaty if subjected to increased pressure over its disputed nuclear programme.
The threat came just hours after world powers referred the dispute back to the Security Council for possible sanctions over a failure by Iran to respond to demands that it suspend sensitive uranium enrichment.
Adjusted for inflation, current oil prices remain below levels reached after the 1979 Iranian revolution.
