* Oil sets new record above $143
* U.S. dollar rebounds
* Oil majors say speculators not to blame for high prices
(Recasts, updates prices)
By Jane Merriman
LONDON, June 30 (Reuters) - Oil rose more than $3 a barrel
on Monday to a new record above $143, propelled by heightened
market fears of conflict between Israel and Iran over Tehran's
nuclear programme.
Prices later retreated from session highs, partly reflecting
a rebound in the U.S. dollar versus the euro.
U.S. light crude <CLc1> was up $1.76 at $141.97 a barrel by
1357 GMT, after a record high of $143.67 a barrel.
London Brent crude <LCOc1> was up $1.91 at $142.22.
"There are many high-level geopolitical news items,
particularly in the Middle East, that are pushing prices up,"
said Mark Pervan, a senior commodities analyst at the Australian
& New Zealand (ANZ) Bank in Melbourne.
Iran's Revolutionary Guards have said Iran would impose
controls on shipping in the Persian Gulf and Strait of Hormuz if
it were attacked. []
The Strait of Hormuz, a narrow waterway separating Iran from
the Arabian Peninsula, accounts for roughly 40 percent of the
world's traded oil flows.
Iran's foreign minister said on Sunday he did not believe
Israel was in a position to attack his country over its nuclear
programme.
Iran's dispute with the West over its nuclear development
programme is just one of many factors behing oil's rise to
record peaks.
Oil has risen more than 40 percent this year, extending a
six-year rally, in response to the Middle East tensions, plus
expectations that supply will struggle to keep pace with rising
demand from emerging economies such as China and India.
SPECULATORS VS FUNDAMENTALS
Concern over long-term supply constraints have also pushed
up the forward price of oil. Oil is priced between $135 and $139
a barrel out to December 2016.
The market, as a result, is sensitive to any supply
disruptions.
A succession of militant attacks on Nigeria's oil facilities
that have shut a fifth of the country's output since early 2006
has helped drive the market higher.
A flood of cash from investors seeking alternatives to
sagging global equity markets and to hedge against inflation has
also contributed to oil's rise.
"Demand from the investment side has been boosted by problems
in the financial sector as well as a desire for
diversification," said Frances Hudson, investment director,
strategy at asset manager Standard Life Investments.
"Also, inflation concerns encourage investment in real
assets such as oil and gold."
Inflation in the euro zone, for example, rose to a record
high of 4 percent in June, data showed on Monday. []
Some have blamed investor flows into oil or so-called
speculative money for the market's rapid climb since the start
of this year, others say it is more to do with the tighter
balance between supply and demand.
The heads of some of the biggest oil companies, gathered at
an oil conference in Madrid, said fundamentals were the main
driver of prices.
Tony Hayward, chief executive of international oil company
BP Plc <BP.L> said it was myth that financial investors were
behind oil's rise. "This is a fundamental signal, this is not
about speculation." []
(Additional reporting by Fayen Wong; editing by James Jukwey)
