Oil Tops $91 a Barrel Amid Rising Mideast Tensions

The price of crude has shot up as the Syrian regime teeters and the US and Iran rattle their sabres over the Strait of Hormuz.

Gabe Kahn ,

Crude oil tanker
Crude oil tanker
Israel news photo: Flash 90

Oil prices rose above $91 a barrel for the first time since late May as signs of increased demands in the US and Europe coupled with rising tensions in the Mideast and Persian Gulf regions.

The benchmark for crude in New York was up $1.56 at $91.43 a barrel – a rise of about $14 per barrel from a low of three weeks ago.

US drivers are paying the corresponding increase at the pump. A gallon of regular gas now costs an average of $3.44, up 11 cents from July 1.

Contributing to the rise in costs are the increasingly destabilized situation in Syria, where embattled President Bashar al-Assad has gone to ground following a bomb that killed several key members of his inner circle, and rising tensions between Washington and Tehran in the Persian Gulf.

US Defense Secretary Leon Panetta on Wednesday issued a stark warning to Iran that any attempt to close the strategically vital Strait of Hormuz would lead to a total defeat of Tehran at the hands of the US military.

Iran has threatened to close the strategic waterway – through which 20% of the world's exportable crude flows – in response to crippling sanctions by Washington and its European allies on Tehran's controversial nuclear program.

For several months the US has maintained two aircraft carrier groups in the Persian Gulf region, as well as ramping up its special forces, anti-submarine, and seaborne mine clearance capabilities there.

Meanwhile, Israel placed its military on high alert as senior defense officials expressed concern over the stability of Assad's regime – and the security of its high-tech and chemical weapons systems, which could fall into the hands of the Hizbullah terror organization or other anti-Israel groups should the Syrian president's rule come to an end.