Middle East tensions drive oil through $143 a barrel

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With Middle Eastern tensions ratcheting up over Iran's nuclear future and amid the general weakness of the dollar and inflation fears, Brent crude for August delivery leapt to a new intraday high of $143.53 with US crude traded in New York also breaking its record to trade as high as $143.67.

Analysts said rising global inflation is leading hedge funds and other speculators to abandon equities and move into commodities.

"Demand [from investors] has been boosted by problems in the financial sector," said Standard Life investment director Frances Hudson. "Inflation concerns encourage investment in real assets such as oil and gold."

Quite where the inexorable rise of oil will end is anybody's guess, though one man who should have a fair idea - Chakib Kelil, president of the Saudi-led oil producing cartel Opec - said at the weekend he reckons it will hit a peak of $170.

Iran is Opec's second-largest producer and fears over its future and of its oil supplies have been caught in an apparent stand-off in which Israel has threatened military strikes unless Iran opens up its uranium-enrichment programme to outside inspectors.

Gold, the traditional alternative to the dollar in straitened times for the greenback, saw its price climb to five-week highs, up as much as $7.35 to $934.55 an ounce.

Oil prices came back in later trading though still ahead of Friday's close.

Brent was up $1.91 at $142.22 a barrel while US crude was $1.76 higher at $141.97.