Updated from 10:57 a.m. EDTOil prices were back above $74 a barrel Thursday on concerns that Israel will expand its offensive against Hezbollah. Also, Shell said it could miss production goals this year. The Israeli prime minister and his security council met to discuss increased air strikes a day after nine Israeli soldiers were killed. The discussions were prompted by Hezbollah's refusal to accept an international peacekeeping force along the border with Israel and the breakdown of a Rome conference to broker a peace deal. The two-week-old conflict, sparked by the abduction of two Israeli soldiers, has killed up to 500 people. Light, sweet crude rose 60 cents to $74.54 a barrel, while heating oil inched up 1 cents to $1.97 a gallon. Wholesale gasoline was down 1 cent at $2.29 a gallon. The fighting in the Middle East, production cuts in Nigeria, saber-rattling in Iran and soaring demand for crude have raised oil prices 21% this year. While the world consumes around 85 million barrels of crude per day, there is only 2 million barrels of excess capacity to cover any short-term spikes in demand. Record-high oil prices have boosted second-quarter profits at energy companies ranging from drillers to oil-field service providers. The world's largest public company, ExxonMobil ( XOM), clocked a 35% increase in net income to $10.36 billion, or $1.72 a share, in its second quarter, surpassing analysts' expectations of $1.64 a share. The results just missed the oil giant's previous record of $10.71 billion in the fourth quarter. Sales rose 12% to $99.03 billion. "We're selling everything we can make," Henry Hubble, Exxon Mobil's vice president of investor relations, said in a conference call this morning. Exxon's executives typically do not participate in the oil giant's earnings calls. Aside from high oil prices, profits were boosted on an earnings-per-share basis, thanks to Exxon's intensive share repurchase program. During the quarter, Exxon spent $7.9 billion on share buybacks and dividends, with $6 billion earmarked for shares. It intends to spend $7 billion on share repurchases in the third quarter.