Oil prices jumped 2.5 percent on Monday to near $74 a barrel on concerns that supplies could take a hit from Iran's defiant pursuit of its nuclear program and violence in Nigeria.
IPE Brent crude futures in London gained $1.87 to settle at $73.89 a barrel after a fire shut ERG group's 160,000 barrel-per-day (bpd) Impianti Nord refinery in Sicily, adding to supply worries.
US light sweet crude rose $1.82 to $73.70 a barrel in afternoon activity as markets remained fixed on Iran.
Iran vowed Sunday to carry on pursuing a nuclear fuel cycle and to strike back if it is attacked. The world's nuclear watchdog said last week Tehran had ignored international calls to abandon its atomic program.
"Iran continues to be a factor with the market waiting what kind of sanctions the United Nations (Security Council) might impose against it," said Tom Knight, trader at products marketer Truman Arnold in Texarkana, Texas.
UN ambassadors from the United States, Britain and France are expected to introduce a Security Council resolution this week to make Iran comply with demands to enrichment.
Failure to do so could result in limited sanctions, although Russia and China - the other two veto-wielding council members - say they do not favour such a move for now.
Concerns over Iran's growing standoff with western nations helped push US oil to a record high of $75.35 a barrel in late April.
Prices fell after US President George W. Bush temporarily eased fuel standards to increase availability of refined products ahead of the summer driving season.
But US Energy Secretary Samual Bodman said the world's top oil consumer may be facing an energy "crisis". Government officials are concerned high US gasoline prices may become a political liability during congressional elections this year.
"There is apparently some evidence we have a crisis," Energy Secretary Samuel Bodman said in a televised interview over the weekend.
Qatari Energy Minister Abdulah al-Attiyah said oil prices were being driven by geopolitical concerns and added there was little oil cartel Opec could do at its June 1 meeting to help bring them down.
"I see the geopolitical situation still pushing the price of oil very high up. You cannot control strong winds, and you cannot control the geopolitical situation," he told reporters.
Violence in Nigeria, where militant attacks have cut crude production by a quarter, also added support to oil markets.
The Movement for the Emancipation of the Niger Delta, which wants more local control over the southern delta's oil wealth, said it had detonated 30 kg (66 lb) of dynamite in a car bombing close to a refinery in the oil capital of Warri.
The militants said it was a warning to oil industry workers and investors, singling out the Chinese government, which last week clinched a multi-billion dollar deal for access to oil acreage.
SINGAPORE: Oil surged 1 percent to above $72 a barrel on Monday as a refinery fire in Italy added fresh concerns to a market already nervous over Iran's defiant pursuit of its nuclear programme and militant violence in Nigeria.
A weekend fire that shut ERG group's 160,000 barrel per day (bpd) Impianti Nord refinery in Sicily renewed concerns about gasoline supply ahead of the summer season, when European plants help meet peak season US demand.
US light, sweet crude jumped 79 cents or 1 percent to $72.63 a barrel by 0850 GMT, adding to a 91-cent gain on Friday that helped limit last week's losses to 4.4 percent. Trading was thin due to holidays in much of Asia and Europe.
IPE Brent crude was up 74 cents at $72.76, with gas oil futures leading the charge with a 1.75 percent or $11 a tonne rally to $638.75 a tonne.
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