Oil futures closed at $117.48 a barrel on Monday—a new record on the New York Mercantile Exchange. And the price of a gallon of gasoline moved above $3.50 a gallon for the first time, according to AAA.
The spike on Monday was caused by minor disruptions in oil production. There were reports that a Nigerian rebel group blew up pipelines in the oil-rich Niger Delta region. An attack on a pipeline last week forced Royal Dutch Shell to reduce exports. And a Japanese oil tanker was damaged Monday when it was attacked by a small boat off the coast of Yemen.
While these disruptions have had little effect on actual supplies in the United States, the impact on the oil markets have been significant. Investors are buying commodity assets, like oil, to hedge against inflation and the falling value of the dollar against other currencies. Rafael Ramirez, Venezuela’s oil minister, told Reuters, “This is not a problem of supply, it’s a problem that is very connected to the financial problems in the U.S. economy.”
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