Oil prices shot up more than $11 to a new record above $139 Friday after Morgan Stanley predicted prices would hit $150 by the Fourth of July. The unprecedented jump is all but certain to drive gas prices well past the $4 mark in the coming weeks.
Oil's meteoric surge, which pushed prices more than 8 percent higher in a single day, added to a huge increase Thursday to cap oil's biggest two-day gain in the history of the New York Mercantile Exchange. The burst higher - which also came on rising Middle East tensions - also raised the prospect of accelerating inflation by adding to already strained transportation costs.
That gloomy outlook sent stocks tumbling, taking the Dow Jones industrials down more than 400 points, nearly a 3% decrease in the index.
Traders also zeroed in on remarks by an Israeli Cabinet minister, who was quoted as saying his country will attack Iran if it doesn't abandon its nuclear program. Transportation Minister Shaul Mofaz added that Iranian President Mahmoud Ahmadinejad "will disappear before Israel does," the Yediot Ahronot daily reported.
Iran is the second-biggest producer in the Organization of Petroleum Exporting Countries, and traders worry that any conflict with Israel could disrupt global supplies.
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