Oil prices hit record, raising inflation fears

The Boston Globe reports:

Oil prices closed at a record $70.40 a barrel yesterday, above last summer's hurricane-driven highs, sending stocks down and renewing concerns about inflation.

A barrel of light crude jumped $1.08 yesterday on the New York Mercantile Exchange. Economists attributed the climb to geopolitical tensions, such as Iran's nuclear-development program and threats to oil production in Nigeria.

Coupled with a hot economy, the prices renewed fears of inflation, especially with the approach of the peak summer driving season. Those fears in turn helped send down stock indexes like the Dow Jones industrial average, which fell 63.87, or half a percent, to 11,073.78. The Dow has now dropped 244 points, or 2 percent, since March 22.

''You couple inflationary pressures and high commodities prices, and I think that now a lot of companies are starting to get spooked that we're facing these things," said Rich Yamarone, economic research director at Argus Research.

Interest rates are probably going higher just based on inflationary expectations.