Oil prices jumped Monday after Britian said a racing yacht carrying five U.K. nationals had been stopped by Iranian naval vessels and that they are now being held in Iran.
Crude climbed $1.40 to $77.45 a barrel on the New York Mercantile Exchange after being mostly flat for much of the session.
British officials said Monday that the yacht may have strayed inadvertently into Iranian waters when it was stopped last Wednesday.
Prices rose on the specter of some kind of confrontation between the British and the Iranians, one of the world’s biggest producer of oil.
Two years ago fifteen British military personnel were seized in the Gulf by Iran. Iran charged them with trespassing in its waters, but all were eventually freed.
The jump in prices comes as the gap between what drivers are paying for gasoline compared with a year ago is widening and figures to get worse between now and the end of the year.
Prices at the pump were $2.629 a gallon on Monday, 80.4 cents more a gallon than a year ago, according to auto club AAA, Wright Express and Oil Price Information Services. That is about $40 more a month for a typical motorist.
The government releases its survey on retail prices late Monday.
Gasoline prices bottomed near $1.61 during the last few days of 2008 as the recession took hold, demand for fuel crumbled and the stock markets tumbled.
Consumers now are paying about $1 billion a day for gasoline, about $300 million more a day for gasoline than they did a year ago.
And in December, for the first time in about 10 years, oil prices are expected to be twice what they were a year ago, says Tom Kloza, chief oil analyst for OPIS.
Crude prices have been trading between $75 and $82 a barrel for the past month or so. Prices hit $33.87 a barrel on Dec. 19.