Oil prices in New York and London have rebounded from three-week lows after news that the US Senate had been granted authority for a potential strike in Iraq.
The news came as French and Yememi investigators said an attack on a French oil tanker on 6 October was due to an attack.
Suggestions that a war could disrupt Middle East oil supplies offset news from the IEA that rising oil prices mean consumption among manufacturers and heavy industry is slowing.
War premium returns
Brent crude prices in London were up 23 cents to $27.97 per barrel as US president Bush gained the approval of the House of Representatives for a military strike on Iraq.
Fears of a US invasion have sent oil prices up over 40% so far this year.
France, Russia and China have yet to agree to a tough new Security Council resolution, but some analysts have suggested war is now inevitable.
"Bush now has internal approval, so he might go it alone," said Mustafa Alani, an Iraqi researcher.
Slowing demand
The rising oil prices came as the Paris-based IEA cut its forecast for world oil demand growth next year.
In its monthly oil market report, the IEA suggested the high prices were slowing consumption among manufacturers and heavy industry.
The IEA also said members of Opec, the Organisation of Petroleum Exporting Countries, were pumping above production quotas.
Analysts said Opec was taking advantage of oil's strength despite the group's official policy of regulating production to maintain steady prices.
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