Oil Jumps on Fears Iran Could Be Attacked

Crude futures were gaining ground Tuesday, buoyed by persistent weakness in the dollar and heightened tension between Israel and Iran that some Pentagon officials believe is careening toward a military conflict.

West Texas crude for August delivery was recently trading $2.66 higher at $142.66 a barrel at the New York Mercantile Exchange, and Brent crude was gaining $2.51 at $142.34 a barrel.

Reformulated gasoline is up 5 cents at $3.55 a gallon, heating oil is trading 8 cents higher at $3.98 a gallon, and near-term natural gas is up 17 cents at $13.52 per million British thermal units.

The dollar continued its slide in overnight trading in Asia in Europe, breaching $1.58 against the euro, 105 yen, and testing $2 against the British pound -- all considered major resistance levels.

Oil's High -- Suck It Up

The upcoming meeting of the European Central Bank has weighed heavily on the dollar over the past two weeks, sending the dollar skidding from $1.53 against the euro on June 14 to nearly $1.60 now. ECB President Jean-Claude Trichet is widely expected to push for a 25-basis-point increase in the ECB's benchmark lending rate at the meeting this week in order to fight signs of inflation.

Also affecting oil markets was a measurable increase in discussion among leading U.S. political figures and the news media about a potential military strike by Israel against Iran.