Oil hits record over $145

By Rebekah Kebede

NEW YORK (Reuters) - Oil rushed to record over $145 a barrel on Thursday ahead of the Independence Day holiday, extending a rally that has added 50 percent to prices this year.

Escalating tensions between Israel and OPEC nation Iran have pushed prices to fresh peaks over the past two weeks, with further support coming from speculators hedging against inflation and a weakening dollar.

The U.S. oil settled up $1.72 at $145.29 a barrel, after earlier hitting an all-time intraday high of $145.85. London Brent settled at $146.08, up $1.82 after reaching an intraday record of $146.69 a barrel earlier.

"On a long weekend, no one wants to take the risk of being caught short with all the tension between Iran and Israel," James Crandell, analyst at Energy Research in New York.

Iran has threatened to block oil shipments through the Strait of Hormuz in the event it is attacked. Speculation has mounted in recent weeks that Israel may be preparing a preemptive strike against Tehran's nuclear program.

Approximately 40 percent of the world's seaborne crude oil trade passes through the Strait of Hormuz.

The new crude oil record came just ahead of the Fourth of July holiday weekend, traditionally the peak driving period for motorists in the nation's largest oil consumer.

Oil has risen nearly 13 percent since the start of June on concerns about Middle East tensions, tight supplies and investors buying crude as a hedge against inflation and the falling value of the dollar.