Oil prices jumped highest in nine months due to a weakening US dollar. Soaring gas pump prices approaching US $ 5 per gallon in many countries. Oil is traded in US dollars and prices tend to rise due to falling of US dollar.
Conditions that cause the crude oil becomes cheaper for investors if purchased with foreign currency. The price of West Texas Intermediate crude (WTI) as reported by Reuters on Friday, February 24, 2012 rose US $ 1.55 per barrel and stay on US $ 107.83 per barrel in New York.
This is the highest price since May 4 last year. While Brent crude rose 72 cents to end at US $ 123.62 per barrel in London. As we all know Iran, the third state of the world oil exporter has halted shipments to the UK and France and may stop exports to other European countries.
Iran also threatened to close the Strait of Hormuz, a path in the Persian Gulf where one-sixth of world exports take place every day in that place. However, experts doubt Iran will try to reduce transmission dramatically, given the country's dependence on oil sales. About half of state revenues are derived from crude oil. Oil prices got an extra boost as the dollar falls against the euro and other major currencies.
Rise in oil prices has helped push retail gasoline prices to record highs this year. Oil prices have risen nine percent so far in 2012 and gas pump prices are up about five percent.
Energy Information Administration said on Thursday that demand has dropped 6.7 percent for oil and 6.1 percent for gasoline. According to AAA, Wright Express and Oil Price Information Service retail gasoline price increased 3 cents to a national average of US $ 3.61 per gallon. A gallon of regular has reached US $ 4 in California, Hawaii and Alaska. It is feared that prices would continue to rise to US $ 5 per gallon.