Oil rose above $62 to a three-month high on Friday after Iran seized 15 British navy personnel, raising concerns about renewed tension between the oil producer and the West. US crude settled up 59 cents at $62.28 a barrel, adding to gains of more than $2 on Thursday.
US oil has risen 26 percent, since crude oil futures dropped to $49.90 on January 18, with Friday's session high of $62.65 the strongest level since December 26 last year.
London Brent crude rose 67 cents to $63.18. Iran captured 15 British Royal Navy personnel during a "routine boarding operation" in Iraqi waters, Britain's Ministry of Defence said. The Foreign Office said Iran's ambassador in London had been summoned and Britain was demanding their immediate safe release. "This is just the kind of scenario we've worried about with all these military assets operating so close together," said John Kilduff, senior vice president for energy risk management at Fimat USA.
The West has been locked in a protracted dispute with Iran over its nuclear program, which Iran insists is for peaceful purposes only. Security Council members on Friday will review a revised draft of a UN resolution to impose new sanctions against Iran over its refusal to halt uranium enrichment, with a view to voting over the weekend.
Prices have also found support from reduced US gasoline supplies ahead of peak summer driving demand, with gasoline futures on Friday hitting $2 a gallon, the highest since August 21, 2006.
Some analysts said these concerns were exaggerated given that refiners were expected to emerge from maintenance sooner than usual this year. Oil markets had fallen sharply after a wave of cross-asset selling triggered at the end of last month by the steepest fall in a decade on the main Shanghai Composite Index and concerns the world economy could be under strain.
But dealers said investors had been reassured by hints from the US Federal Reserve that it was less inclined to raise interest rates, boosting hopes for a near-term cut in borrowing costs.