SAN FRANCISCO (MarketWatch) -- Crude-oil futures rocketed briefly past $88 a barrel Tuesday for the first time as mounting concerns over a possible Turkish attack on Kurdish rebels in northern Iraq and tight U.S. crude supplies heading into the winter kept strong upward pressure on energy prices.

The benchmark light, sweet crude contract for November delivery hit an all-time session high of $88.20 a barrel on the New York Mercantile Exchange.

The advance was clipped by traders eager to lock profits, however, ending the day at $87.61 a barrel. Still, that's up $1.48, or 1.7%, from Monday, when crude sprinted $2.44 to what was a short-lived record close at $86.13.

November crude has soared $7.35 a barrel, or nearly 9%, in just a week.

Behind this latest spike was a mixture of fundamental supply concerns and speculative dollars chasing higher profits.

Threats by Turkey's government, seeking parliamentary approval to take military action against Kurdish separatists hiding just across the border in northern Iraq, has raised tensions in the Middle East and could have "very grave consequences," Iraq's Deputy Prime Minister Barham Saleh told the BBC.

Turkey wants to flush out pockets of the Kurdistan Workers Party, or PKK, operating from bases in northern Iraq. The Ankara government accuses the group of stepping up what it calls terrorist attacks on Turkey in a bid to establish a separate homeland.

For the oil market, a unilateral strike by Turkey against targets in Iraq could again shut down the Ceyhan oil pipeline that runs from the oil fields of Kurdish northern Iraq across southern Turkey to a tanker loading terminal in the Mediterranean.

The pipeline has struggled to resume regular crude shipments, languishing for about four years following the U.S.-led invasion of Iraq in 2003. This means energy traders are reacting more to the threat of a wider conflict than the loss of actual barrels flowing through Ceyhan.

The tense situation also fueled more speculative buying, with the red-hot commodities sector diverting funds from more sluggish investments. It also puts crude within easy striking distance of $90 a barrel. See MarketWatch First Take.

While $90 oil is nominally an alarming level, economists point out it still falls short of the inflation-adjusted figure of $100 a barrel hit back in the early 1980s.

These latest rumors and events have "kept churning the market," said Charles Perry, chairman of energy-consulting firm Perry Management.

"It appears to me that the real thing driving this market up is the realization that we are in short supply, and it is not getting any better," he said.

“ 'It appears to me that the real thing driving this market up is the realization that we are in short supply, and it is not getting any better.' ” — Charles Perry, Perry Management

At the moment, "the world is awash in little news items that impact the market," said Perry. "But if we were not already in short supply, the market could stand these minor events."

The market will get a closer look at U.S. energy supplies on Wednesday, when the Energy Department releases its weekly summary of oil and fuel inventories for the week ended Oct. 12.

Meanwhile, there was speculation over a potential storm building in the Caribbean and a report that production from the Organization of the Petroleum Exporting Countries was down more than 100,000 barrels per day, Perry said.

In its monthly report released Monday, OPEC added to the supply fears when it predicted non-OPEC countries will produce 110,000 fewer barrels of oil per day than expected in the fourth quarter, even as demand for crude oil will grow by 100,000 barrels a day compared with last year. See the full report.

OPEC attempted to calm the market Tuesday, blaming the spike in prices unjustified given current supplies.

"While the Organization does not favor oil prices at this level, it strongly believes that fundamentals are not supporting current higher prices and that the market is very well supplied," OPEC Secretary-General Abdalla Salem El-Badri said in a statement.

Overbought oil?

Perry said he doesn't expect to see $90 oil this week, though that level may be reached in two to four weeks.

The path of least resistance for crude seems to be higher still, said Edward Meir at Man Energy. "Although, like many others out there, we are hard-pressed to justify such high valuations," he said.

John Person, president of NationalFutures.com, warned that oil prices may be overbought somewhere between $85 and $87.50.

"This may have been the threshold high for the time being," he said in emailed comments.

“ 'Prices are seen as out of control and are in a spot where it can now jeopardize global economic stability.' ” — John Person, NationalFutures.com

Overall, "prices are seen as out of control and are in a spot where it can now jeopardize global economic stability," he said.

"China, European and American consumers will become more frustrated, and this can lead to changes in consumption habits, as well as potential releases in SPRs [strategic petroleum reserves] by governments to ease prices."

Crude lifts products

Crude's record highs fanned a fresh rally for petroleum products as the cost of the raw material bolstered fundamental support for heating oil and gasoline prices, but the rally wavered as the session wore on.

Heating oil for November delivery finished the day up 3.2 cents at $2.3387 a gallon. The November reformulated gasoline contract rose 1.6 cents, or 0.8%, to $2.1737 a gallon, though falling from a contract high of $2.2019.

The Nymex November natural-gas contract fell 7.8 cents to $7.367 per million British thermal units, a 1% drop from the previous session.