Oil climbed to a 3-week high in trading, on Monday, on the back of fears of a potential oil boycott following an escalation of violence in the Middle East.Israel’s bloody offensive in the hapless Gaza Strip region encouraged an Iranian military commander to lead calls for an oil boycott on supplies to the warring nation.

The news came on the back of thousands of Israeli (IDF) troops crossing the border, on Sunday, capturing bases that Hamas militants has used to launch missile attacks against their neighbours

An Organisation of Petroleum Exporting Countries (OPEC) source, of which Iran is a member nation, responded by claiming that the Iranian call would be unlikely to sway other member nations round to their way of thinking. Particularly as OPEC’s most influential member, Saudi Arabia, and neighbouring Kuwait, Qatar, and the United Arab Emirates (UAE) are all regional allies to the U.S.

Iran, who is the world’s fourth largest producer of oil has a track record of rallying against the interests of Israel, and is primary financial backer: the United States

The U.S.’s main contract: light, sweet crude for February delivery jumped to $48.68, before falling back to $46.44 – still 10 cents up on the day.

The price of London’s benchmark contract, North Sea Brent crude, was also up $1.17, to $48.08 in Monday trading.

In total oil prices have rocketed by more than 25% since Israel began its assault upon the Gaza Strip on December 27, 2008 – a stark comparison with the 27% price tumble seen in the week prior to the attacks.,

Bank of Ireland analyst, Paul Harris, said: “Sabre rattling by Iran and further instability in the Middle East always produces fears for oil supplies, which is putting a platform under prices.”

Although the outbreak of violence in the troubled Gaza region is unlikely to threaten oil supplies, there is an underlying concern that it may affect other countries in the region.

Analysts foresee that continued fighting between Palestinians and Israelis, together with the recent outbreak of the gas dispute between Russia and Ukraine may combine to push international oil prices higher.

The Middle East accounts for around a third of the entire world’s oil production. Back in July 2006 prices climbed to a then record $78.60 a barrel following Israeli attacks upon Iranian-backed Hezbollah forces in Lebanon. Gerard Burg, energy and minerals economist at National Australia Bank astutely noted that prices in both instances were being driven by “the worst case scenario.”

Oil prices have proven once again to embody the up-to-the-minute geopolitical tensions in oil producing regions the world over.

(OilVoice)