LONDON, July 13: World oil prices hit records above $76 on Thursday as Israel continued an offensive in Lebanon, while key producer Iran was defiant in the face of Western calls to rein in its nuclear ambitions.

New York's main contract, light sweet crude for delivery in August, hit a record $76.60.

Shortly afterwards, Brent North Sea crude for August delivery struck a historic $76.31 per barrel in electronic deals.

Both contracts had earlier on Thursday smashed through last week's previous peaks as news emerged of Israel's land, sea, and air assault on Lebanon, opening a new front in the escalating Middle East crisis.

“Geopolitical tensions seem to be exploding all over the map... we are firing on all cylinders this week, and the only direction is higher still,” said Man Financial analyst Ed Meir.

Earlier in the day the New York contract stood at $76.25 per barrel, up $1.30 from Wednesday's close. London Brent was showing a hefty gain of $1.75 at $76.14 per barrel.

At least 44 civilians were killed on Thursday as Israeli jets pounded Lebanon in retaliation for the capture and killing of soldiers by Hezbollah, igniting fears of a wider Arab-Israeli conflict.Calyon analyst Mike Wittner said that, while the conflict between Israel and Lebanon does not directly threaten oil supplies, ultimately,

“everything in the Middle East affects oil.”

Investec's Bruce Evers added: “It's Middle East tension: will it spread beyond Lebanon, will it accelerate and worsen?” Evers also pointed to simmering market concerns over the Iranian nuclear energy crisis, developments concerning North Korea, reported unrest in Nigeria and further turmoil in Iraq.

“The traders have got so much to get their teeth into they don't know which way to turn,” Evers said, adding: “When it rains it pours.” Iranian President Mahmoud Ahmadinejad warned on Thursday that Tehran could halt UN inspections and quit the nuclear Non-Proliferation Treaty if subjected to increased pressure over its disputed nuclear programme.

The threat came just hours after world powers referred the dispute back to the Security Council for possible sanctions over a failure by Iran to respond to demands that it suspend sensitive uranium enrichment.—AFP