Washington, USA (AP) – The price of oil surpassed $78 a barrel Friday and leapt 5 percent in the past week after Israeli attacks against Lebanese militants stoked fears of a wider Middle East conflict and possible oil-supply disruption.

The run-up in oil raised concerns about inflation and the economy at large, sending stock prices tumbling. OPEC tried to reassure the market by stressing its commitment to “order and stability,” but at the same time said it “has no influence” over the geopolitical turmoil underlying today’s volatility.

Because oil accounts for more than 50 percent of the cost of gasoline, U.S. pump prices, now averaging $2.96 a gallon nationwide, are likely to climb some more, analysts said.

Light sweet crude for August delivery on the New York Mercantile Exchange soared as high as a record $78.40 a barrel in overnight electronic trading. By Friday afternoon, Nymex oil futures traded at $77.60, up 90 cents from Thursday’s record close.

Gasoline futures rose by more than 3 cents to $2.335 a gallon – the highest level since last September, when U.S. refinery output as sharply curtailed by hurricane damage.

“We’ve reached a level where we’ve put all the scare premium into the market that we can,” said James Cordier, president of Liberty Trading in Tampa, Fla. “At this point, we have to have a disruption to move smartly higher from here.”

Red hot markets

Cordier said that while fuel demand in the U.S. is still strong, rising energy costs appear to be dampening consumer spending in other areas and that could eventually slow the economy enough to help cool energy prices.

For the moment, though, oil markets are red-hot.

Israel widened its offensive on Lebanon on Friday, with fighter bombers blasting the airport for a second day and cutting off the main highway to Syria. Hezbollah has fired more than 100 rockets into Israel. More than 80 people have died, most in Lebanon, in three days of violence sparked by the capture of two Israeli soldiers by Hezbollah militants.

While Israel and Lebanon are not major oil suppliers, the fear is that the conflict could expand in the region, which produces nearly a third the world’s oil and has almost two-thirds of its untapped reserves.

Iran has threatened to use oil as a weapon if the United Nations invokes sanctions in its dispute with Tehran over its nuclear program. While OPEC’s No. 2 supplier has not raised the issue of withholding oil from the market in a sign of solidarity with Hezbollah, the possibility – while deemed unlikely – weighs on the market’s psychology, analysts said.

“I don’t think we’re done on the upside,” said BNP Paribas Commodity Futures broker Tom Bentz, referring to the rise in oil prices.

The Organization of Petroleum Exporting Countries issued a statement in which it blamed geopolitical factors beyond its control for the recent price volatility. The group emphasized that the market is “well-supplied with crude.”

Indeed, oil prices did not arrive at the doorstep of $80 a barrel overnight. The combination of rising global demand, limited excess production capacity and concerns about supply interruptions from Nigeria to the Gulf of Mexico have all played a part, analysts said. So, too, has the influx of billions of dollars into oil markets in recent years by hedge funds and other financial institutions angling for profits amid global instability.

Brent for August delivery at London’s ICE Futures exchange, which expires at the close of trading Friday, jumped as high as $78.03, but then fell back to $77.46, up 77 cents.

“We haven’t even taken into account a potential hurricane in the United States, so getting to $80 and beyond this summer seems quite inevitable,” said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. “But if these Middle East events somehow get resolved, prices could also drop sharply.”

Heating oil futures rose 2.6 cents to $2.1060 a gallon and natural gas futures advanced 29 cents to $6.42 per 1,000 cubic feet.