Crude Prices Soar on Supply Worries

Updated from 2:50 p.m. EDT

Oil prices soared Friday as supply concerns in Ecuador and blasts in two Middle Eastern ports took center stage.

After declining in three of the previous four sessions, crude for September delivery closed up $2.08 to $65.35 a barrel on Nymex. Gasoline futures rose 4 cents to $1.90 a gallon.

Heating oil futures rose 4.5 cents to $1.83 a gallon.

Oil exports from Ecuador continued to be halted Friday after protests against foreign oil companies operating in Amazon provinces prompted a military response. Ecuador produces roughly 200,000 barrels a day, most of which is shipped to the U.S.

Protesters are demanding that foreign oil companies operating in the region finance infrastructure projects and more job opportunities, the Wall Street Journal reported. They also demand the renegotiation of contracts with foreign oil operators EnCana(ECA), Occidental Petroleum(OXY) and the Brazilian oil company Petrobras(PZE) to increase state participation.

"The events in Ecuador are underscoring the hot spots in South America," says Kevin Kerr, at Kerr Trading International. "We really didn't see much of a relaxation in prices, and oil still seems poised to reach the $70-a-barrel level."

Other reports of supply disruption came from Nigeria, where Royal Dutch Shell's(RD) 14,000-barrels-a-day facility has been shut for three days due to unrest among local communities.

Also supporting oil prices Friday were reports that three Katyusha rockets exploded in Israeli and Jordanian Red Sea port cities, apparently targeting two U.S. ships, the USS Ashland and the USS Kearsage. One Jordanian soldier was killed.

The Jordanian port of Aqaba, which was hit by two of the rockets, borders with Saudi Arabia.

"It's not surprising to see a price rally on a Friday in the summer, especially after heavy selling on Wednesday and Thursday," said Michael Fitzpatrick, energy analyst at Fimat USA. "I expect the selling to resume, however, next week."