Oil Prices Hover Around $70 a Barrel

A gallon of gas has jumped 10 cents per gallon in a week. The price of a barrel of oil is in record territory at about $70. Analysts blame the high cost of crude oil on strong demand, tight global supplies and political troubles in Iran.

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RENEE MONTAGNE, host:

In today's business news, the price of oil reaches record levels.

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MONTAGNE: Yesterday was an anxious day for the world's financial markets. The price of a barrel of oil finished at $70.40. That's a record high if not adjusted for inflation. The increase helped push stock prices down sharply, and sent the price of gold soaring.

NPR's Jim Zarroli reports.

JIM ZARROLI reporting:

Oil prices haven't been this high since the aftermath of Hurricane Katrina, which wreaked havoc on the gas and oil facilities in the Gulf of Mexico.

What's sending prices higher this time are some of the usual suspects, like increased demand for oil from Asia, but there's also another factor. Economist Joel Naroff says tensions with Iran have made oil traders nervous.

Mr. JOEL NAROFF (President and Chief Economist, Naroff Economics Advisors, Inc.): We're under real major pressure as far as oil prices, between supply concerns with international factors and continued high demand across the world. It's not a good trend that we're seeing at this point.

ZARROLI: Rising oil prices tend to filter throughout the economy, acting as a drag on growth. And so, investors had reason for worry yesterday. What's more, the price increases came on the same day that Chicago Fed President Michael Moscow issued a warning about inflation pressures. As a result, all of the major stock indexes were down. The Dow Jones Industrial average lost almost 64 points. The NASDAQ composite index lost about one percent of its value before rebounding. Meanwhile, the price of gold, which often rises during periods of inflation pressures, finished the day at levels not seen in a quarter century.

Jim Zarroli, NPR News, New York.

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