Oil prices have risen above $73 a barrel after Iran hinted it might cut its crude output if its ongoing nuclear stand-off with the West escalates.
Ayatollah Khamenei's comments have increased oil supply concerns
The comments were made by Iran's Supreme Leader Ayatollah Ali Khamenei, who warned oil exports could be reduced if the US makes a "wrong move".
The West has threatened Iran with economic sanctions unless the Iranian government halts its nuclear ambitions.
US light sweet crude settled 27 cents up at $72.60 after peaking at $73.10.
Meanwhile, London's Brent crude rose 34 cents to settle at $71.37.
Tension between Iran and the West over Tehran's nuclear development has helped push global oil prices up 20% since the start of 2006.
While Iran insists it is enriching uranium simply to develop nuclear power stations, the West fears Tehran also hopes to build its own nuclear weapons.
Although the US has committed itself to finding a peaceful solution to the stand-off, the latest comments by Ayatollah Khamenei seem to suggest Tehran still fears America may be at least considering a military conclusion.
Washington last week offered to join in direct talks with Iran following agreement among leading members of the United Nations Security Council on a package of incentives to encourage Iran to give up uranium enrichment.
Other factors that have hit oil prices in recent weeks are ongoing anti-government unrest in Nigeria, and some minor glitches at US refineries, but analysts agree that the situation in Iran - the world's fourth-largest oil exporter - remains the significant factor.
"The gains are a combination of everything but most importantly it's Iran," said John Brady, a broker with at ABN AMRO in New York.