Oil Again Marches Higher

Crude oil futures rose for a seventh straight day in New York, rallying Wednesday on concerns over escalating geopolitical strife between the U.S., Great Britain and Iran.

The May contract for light sweet crude jumped $1.15 to $64.08 a barrel. Reformulated gasoline fell a penny to $2.06 a gallon, and heating oil climbed 4 cents to $1.83 a gallon.

The near-term natural gas contract rose 6 cents to $7.56 per million British thermal units.

After normal trading hours closed on Tuesday, rumors that the Iranian navy attacked a U.S. Navy vessel sent crude prices soaring in electronic markets. The May contract rose more than $5, reaching $68.09 a barrel, before returning to normal levels once the rumors were deemed false.

The U.S. and Britain are holding naval war games in the Persian Gulf, and the region is crowded with activity. Two U.S. aircraft carrier groups are there, and Navy planes are simulating air combat scenarios.

While Iran has complained that the war games are examples of military showmanship at a time when overall tensions are high, a U.S. Navy representative said exercises are frequently held with its allies, and that it makes logistical sense to hold games when two carrier groups are nearby.

The war games are certainly increasing tensions in the Middle East at a time when things are already highly stressed. Iran continues to detain 15 British Royal Navy sailors who were captured last Friday while boarding an Iranian cargo vessel. Iran says the sailors were in Iranian waters; Britain adamantly claims they were in Iraqi waters.