Oil Jumps on Fears Iran Could Be Attacked

ABC News reported late Monday evening that a high-ranking official in the U.S. Defense Department believes that Iran is making progress in acquiring enriched uranium, which could be used to build a nuclear weapon. The defense official reportedly said that an Israeli attack against Iranian infrastructure sometime this fall is growing increasingly likely.

John Bolton, the U.S. ambassador to the United Nations, added fuel to the debate in a Monday morning television interview on Fox News, saying that it "makes a lot of sense" for Israel to attack Iran while George Bush still resides in the White House. Bolton said that any country making the case for military action against Iran would need to acquire some degree of U.S. approval to do so, and that Israel has a much better chance of getting that from President Bush than it does from a newly elected president from either political party.

Not affecting oil prices, but important nonetheless, was the latest Medium-Term Oil Market Report from the International Energy Agency, a global energy watchdog group. The IEA slashed its forecasts for global oil demand over the next five years, saying that there are clear signs high oil prices are eating into demand throughout the global economy.

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Interestingly, the IEA said that oil consumption has fallen the most in wealthy economies, which tend to have a higher ratio of consumers who use oil frivolously on consumer items like gas-guzzling SUVs. Demand for oil has not fallen as much in the world's poorer and emerging economies, which tend to allocate more of their oil toward the most essential components of their economies in times when prices are abnormally high.