Crude Oil Jumps on Israel-Iran Bomb Talk

Energy futures were making strong gains Friday at the New York Mercantile Exchange, stimulated by a report Israel is contemplating military action against Iran, rumors that Saudi Arabia is planning to increase oil production and a weaker U.S. dollar.

West Texas light crude for July delivery was up $3.85 at $135.78 a barrel, and Brent crude was advancing $3.64 at $135.64 a barrel. Reformulated gasoline was ahead by 8 cents at $3.44 a gallon, heating oil was adding 11 cents to $3.83 a gallon, and near-term natural gas was up 26 cents at $13.12 per million British thermal units.

The U.S. dollar was putting on a poor showing, with the euro gaining more than a penny at $1.5650. The U.S. Dollar Index, which measures the value of the dollar against a basket of international currencies, is down 0.74% at 72.95.

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Traders are also focused on the possible repercussions of this weekend's meeting of members of OPEC. Many industry observers believe that the oil-exporting group will likely announce an increase in crude production at the meeting's end.

At the same time, reports about possible military action against an OPEC state was also contributing to the rise in crude. The New York Times carried an article saying that Israel conducted "a major military exercise" earlier in June that U.S. experts believe had the makings of preparations for an attack on Iran's nuclear facilities.

Meanwhile, energy stocks were mostly lower. BP (BP Quote) was down 0.7% at $66.99, ConocoPhillips (COP Quote) was 0.5% lower at $93.17, Chevron (CVX Quote) was gaining 0.5% at $97.36, and Exxon Mobil(XOM Quote) was flat at $85.80.

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The U.S. Oil (USO Quote) ETF, which closely tracks the performance of WTI contracts on the Nymex, was moving 3.1% upward at $110.25.