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Oil prices surge past $86 per barrel. How high can the costs go?

On Monday, oil prices reached a new high for the year – a sign of growing confidence that economic activity is recovering. But high prices could put a squeeze on the economy.

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In this 2009 file photo, an oil pump works in the Persian Gulf desert field of Sakhir, Bahrain. Oil prices surged past $86 a barrel Monday and could rise to $90 or $95.

Hasan Jamali/AP/File

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Oil prices rose to new highs for the year on Monday – above $86 per barrel.

It's a sign of growing confidence that economic activity is recovering, and according to some energy analysts, fuel prices could keep heading upward just in time for the summer driving season.

But if oil prices keep rising, it could put a squeeze on that same economic activity.

A catalyst for Monday's 2 percent price rise was better job-market news. The US added 162,000 jobs in March, according to a Friday report from the Labor Department. Oil markets had been closed for Good Friday.

Also, the energy-intensive manufacturing sector has been reviving faster than many expected.

The big question is: How high will prices rise, and with what impact on the economy?

"Economic optimists have taken control of the market," Gene McGillian, an analyst at Tradition Energy in Stamford, Conn., told Reuters. "We can keep trending higher."

Forecasters are divided over how much momentum oil prices will have. The run-up could continue to $90 or $95 a barrel or higher, some say. Factors that could keep prices rising include more demand from China, possible escalation of Western-nation tension with Iran, and market speculation as investors look for hot trends to ride.

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