Aug. 8 (Bloomberg) -- Crude oil rose to a record in New York on growing concern about the security of energy supplies from Iran and Saudi Arabia as the U.S. economy expands.

The U.S. closed its embassy in Saudi Arabia, the world's biggest oil exporter, because of a threat against the building. Iran, OPEC's second-largest producer, rejected Europe's demand to stop enriching uranium. A U.S. government report on Aug. 5 showed wages rose faster than expected in July, prompting oil to post its third week of gains.

``The first major factor is the rising demand outlook, the second is geo-political risk,'' said Dariusz Kowalczyk, senior investment strategist at CFC Securities Ltd. in Hong Kong. There are ``fears that Iran will reject the EU-3 proposals on their Uranium processing. There is also the reported threat against the U.S. Embassy in Saudi Arabia.''

Oil for September delivery rose 23 cents, or 0.4 percent, to $62.54 a barrel in after-hours electronic trading on the New York Mercantile Exchange at 12:55 p.m. in Singapore. It earlier reached $62.69, the highest intraday price for the contract nearest expiry since trading began in 1983. On Aug. 5, the September contract rose 93 cents, or 1.5 percent, to $62.31 a barrel, surpassing the previous record close of $61.89 on Aug. 2.

Crude oil for January delivery rose as much as 2.2 percent on the Tokyo Commodity Exchange, Asia's biggest energy futures market, to 40,250 yen a kiloliter ($56.96 a barrel).

Weaker Yen

A weaker yen also increased anticipation of increasing costs to buy dollar-denominated oil for users in Japan, the world's second-largest oil importer. The yen dropped to 112.63 per dollar as of 1:40 p.m. in Tokyo from 111.95 late on Aug. 5 in New York, according to electronic foreign-exchange dealing system EBS.

Oil prices are 40 percent higher than a year ago, having gained 20 percent during the past three months on concern U.S. refiners would not be able to meet summer gasoline demand and store fuel for the northern hemisphere winter.

While consumers are concerned about higher oil prices, the U.S. economy is continuing to create more jobs and expand at a strong rate, said Labor Secretary Elaine Chao on Aug. 5. U.S. employers added 207,000 workers in July, beating a median estimate of 180,000 in a Bloomberg survey. Wages increased at their fastest pace in a year, the Labor Department said on Aug. 5.

Auto sales

The nation's gasoline demand is expanding as General Motors Corp., Ford Motor Co. and DaimlerChrysler AG led the second- highest month ever for U.S. auto sales in July. Sales rose 22 percent to an annualized 20.9 million units in July, according to Autodata Corp.

In China, the second-biggest oil consuming nation, an increase in car sales is also leading to demand growth. The country's July passenger car sales rose 44 percent on year to 260,000 units, state news agency Xinhua reported today, citing data from the China Automobile Information Association.

The Organization of Petroleum Exporting Countries has raised its production quota five times in the past year in an effort to lower prices and swell global stockpiles before demand peaks in the fourth quarter.

``The mid-term trend is for higher prices to continue in anticipation of the pre-winter seasonal peak in October,'' Kazunaga Maeno, a trader at Mitsubishi Corp. in Tokyo said in a note to clients.

OPEC, which pumps about 40 percent of the world's oil, raised its output 0.9 percent the past two weeks to 30.4 million barrels a day, the state-owned Kuwait News Agency quoted OPEC President Sheikh Ahmad Fahd al-Sabah as saying on Aug. 6.

Security Threat

Saudi Arabia is OPEC's biggest producer and the world's largest exporter. The U.S. has closed its embassy in the Saudi Arabian capital, Riyadh, and its consulates in Jeddah and Dhahran because of a ``specific and credible'' threat to U.S. government buildings, a U.S. State Department official said yesterday.

Saudi Arabia has been battling for more than two years suspected sympathizers of Osama bin Laden's al-Qaeda network, who have targeted westerners to undermine the ruling al-Saud family and threaten the oil industry.

Saudi Arabia's King Fahd died Aug. 1, increasing concern about political stability in the country. Abdullah bin Abdulaziz al-Saud became Saudi Arabia's sixth king on Aug. 3, becoming one of two octogenarians controlling affairs in the kingdom. Abdullah's half-brother, Prince Sultan bin Abdulaziz, currently minister of defense and also in his 80s, became Crown Prince.

``There are enough issues bubbling away in the background'' and this is yet another, said David Thurtell, commodity strategist at the Commonwealth Bank of Australia in Sydney. ``An attack on the U.S. and its interests in Saudi Arabia doesn't imply there's an imminent threat to Saudi stability'' or its oil output, he said.

Iran

Iran, OPEC's second-largest oil producer, rejected as ``unacceptable'' a European Union proposal that calls for the suspension of the country's uranium enrichment program, the nation's foreign ministry said Aug. 6.

Europe has offered to help Iran develop its nuclear power plants, build pipelines and open negotiations for new trade agreements, the Journal du Dimanche quoted French Foreign Minister Philippe Douste-Blazy as saying yesterday. The matter will be taken to the United Nations Security Council, if Iran refuses to renounce the development of nuclear weapons, he said.

``The last thing you want is the UN imposing sanctions on Iran,'' Thurtell said. ``If Iran says it's going to pull its oil, things are going to get ugly.''

Gasoline futures rose for an eighth session in nine, on concern refinery breakdowns and hurricanes may limit supplies during the peak summer driving season. U.S. gasoline demand usually wanes after the Labor Day holiday early September.

Refineries, Hurricanes

Refiners in the U.S., including BP Plc, Exxon Mobil Corp. and Sunoco Inc., last week shut plants for maintenance or lost production because of breakdowns.

Limited refining capacity and the risk of hurricanes may boost gasoline and distillate prices for some months to come, said Gerard Burg, a minerals and energy economist at National Australia Bank Ltd. in Melbourne.

``Any time we have a storm now we're going to have the market really on-watch,'' he said. Prices may react ``very wildly'' to any sign a storm is headed for the Gulf of Mexico, Burg said.

Tropical Storm Irene, 1,100 miles northeast of the northern Leeward Islands, may pass east of Bermuda during the next five days, the National Hurricane Center said on its Web site. That track will take the storm away from the Gulf, which receives more than half of U.S. oil imports and accounts for 30 percent of the country's oil production.

Gasoline for September delivery rose 0.78 cent, or 0.4 percent, to $1.8400 a gallon in after-hours trading. The contract rose 2.99 cents to $1.8322 a gallon on Aug. 5, the highest close since the contract began trading in 1984. The all-time for gasoline is $1.86 a gallon set on July 8.

To contact the reporters on this story: Hector Forster in Tokyo at hforster@bloomberg.net. Will Kennedy in Singapore at wkennedy3@bloomberg.net

Last Updated: August 8, 2005 00:58 EDT