NEW YORK (CNNMoney.com) -- Oil continued to rally for an eighth straight session and topped $81 a barrel for the first time in two months as a pricing dispute and disruption in crude exports between Russia and Belarus worried investors.
Oil for February delivery rose $1.92, or more than 2%, to $81.28 a barrel. Earlier in the session, prices touched $81.35, the highest since the end of October.
"Russia is playing oil politics again and is making the market nervous," said energy economist James Williams, president of WTRG Economics.
Reports say Russia wants to charge higher prices and tax its exports of oil to Belarus, where refineries provide oil throughout the European Union. If the countries don't come to an agreement on pricing soon, Williams said investors are concerned the world's biggest oil producer could significantly disrupt oil supplies.
"It is not an immediate concern today because there is probably enough refined product to last a week, but if you make the market nervous, prices will go up," he said.
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.
Gasoline prices. The national average price for a gallon of regular unleaded gas increased to $2.663, up 0.3 cent from the previous day's $2.660, according AAA. It was the 11th consecutive increase.
