NEW YORK (CNNMoney.com) -- Oil continued to rally for an eighth straight session and closed at the highest level in more than fourteen months as a pricing dispute and disruption in crude exports between Russia and Belarus worried investors.
Oil for February delivery rose $2.15, or 3%, to close at $81.51 a barrel, the highest settlement since Oct. 9, 2008.
"Russia is playing oil politics again and is making the market nervous," said energy economist James Williams, president of WTRG Economics.
After earlier reports on Monday that Russia briefly cut off supplies to refineries in Belarus, Russia said later in the day that it had resumed exports.
"The story isn't necessarily over yet," said Phil Flynn, senior market analyst at PFG Best. "This is an ongoing concern and it raises a larger issue of energy security in Europe overall."
Prices were also boosted by a softer dollar, which was down against the euro, pound and the yen. Crude oil, like other commodities, is priced in dollars, and a weaker greenback tends to support prices.
Prices have spiked 10% in the last seven sessions. They climbed 78% in 2009 and posted the largest annual percentage gain since 1999, when prices jumped 112% during the year. Prices surged 134% since hitting an annual low in February.
But Williams doesn't expect the current rally to be a harbinger for the future of oil. While prices may continue to hike the first couple of weeks on colder temperatures across the nation, Williams said oil will not hold above $80 a barrel for long, and likely drop to between the $70 and $80 range as the economy undergoes a slow recovery.
He added that stability in Iraq could pressure oil prices even further.
"Iraq has opened up to foreign oil companies refurbishing its field and getting oil production back up," Williams said. "If the the internal squabbles get under control, Iraq could increase oil production tremendously in a short period of time."
He said peace in Iraq could add up to 1 million extra barrels of crude oil to the market by the end of the year, and the country could rival Saudi Arabia in production levels within five years.
|Overnight Avg Rate||Latest||Change||Last Week|
|30 yr fixed||4.39%||4.35%|
|15 yr fixed||3.66%||3.68%|
|30 yr refi||4.37%||4.35%|
|15 yr refi||3.65%||3.66%|
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