Crude oil has hit a fresh record high of more than $147 a barrel on Friday over a possible disruption in already tight global oil supplies.

Prices rose more than $5 a barrel, or close 3.75 percent to trade at $147.34 by 3.42pm and market watches warned the gains would not stop there.

Foremost on trader's minds was growing tension between Israel and Iran, which have been reported to be on a "collision course".

Iran is Organisation of the Petroleum Exporting Countries' (Opec's) second-biggest crude oil producer after Saudi Arabia with an output of about four million barrels per day.

"The rhetoric form Iran is heating up. They're shooting off the missiles, and (there are) a lot of provocative statements on both sides," Phil Flynn, vice-president at futures brokerage Alaron Trading in Chicago was quoted by MarketWatch as saying.

Israel hinted at attack on Iran

Iran has test fired a number of missiles in recent days, including a missile that's capable of reaching Israel.

Israel has in the meantime hinted at a pre-emptive attack on Iran, saying it is not afraid to take action.

Israeli foreign minister Tzipi Livni on Friday claimed Iran poses a 'comprehensive' threat not only to Tel Aviv but also to the Middle East.

Iran threatens not only Israel but also other countries, she alleged.

The US has confirmed that it would step in to the fight and defend Israel against Iran.

US Secretary of State Condoleezza Rice warned Iran on Thursday that the US would not back down in the face of threats against Israel.

An "unlimited" increase

The head of Opec warned on Thursday that oil prices would experience an "unlimited" increase in the event of military conflict involving Iran because the group's members would be unable to make up the lost production.

"We really cannot replace Iran's production – it's not feasible to replace it," Opec secretary general Abdalla Salem el-Badri told the New York Times in an interview.

There were also worries about supply disruptions in Nigeria and Brazil.

Dow Jones Newswires reported that oil workers at Brazilian state-run oil giant, Petrobras, planned to embark on a five-day strike from Monday next week.

The work stoppage would halt production at 42 drilling and production platforms in the Campos Basin, off the coast of Rio de Janeiro and Espirito Santo states, said Dow Jones Newswires.

Gold followed oil higher and was last quoted almost two percent or more than $18 an ounce at $963.05 – its highest level since March this year.

Spot gold also received another boost as the dollar slid against the euro, which was last quoted at US$1.5897 from a close of $1.5785.

Platinum was also sparkling at $2042.50, which is $46 an ounce or 2.30 percent up from its previous close of $1996.50.

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