Oil prices climbed today, holding close to a three-month high as mounting tension over Iran's nuclear ambitions raised fears of supply disruption from the world's fourth biggest exporter.
US crude oil futures rose by 62 cents to $64.56 a barrel this afternoon after rising 57 cents yesterday when prices hit a three-month high of $64.80.
London Brent crude rose 80 cents to $62.97.
The foreign ministers of Britain, France and Germany, meeting in Berlin today, were expected to abandon talks with Iran and call for its referral to the UN Security Council.
Iran has said it aims only to develop a civilian nuclear power programme, but the international community suspects it is seeking to develop an atomic bomb.
Analysts fear that if UN sanctions are imposed, it could slow investment in Iran's ageing oilfields and that Tehran in retaliation might cut off its oil supplies.
If Iran halted exports of around 2.4 million barrels per day, the rest of the world's spare capacity would not be able to make up the shortfall.
Oil traders are also nervous about the situation in Nigeria, the world's eighth largest oil exporter, where an explosion on a crude oil pipeline forced Royal Dutch Shell to cut 100,000 bpd of production.
Shell was already on a state of high alert after armed men kidnapped four foreign oil workers from an offshore oilfield in Nigeria operated by the major.
Concern about the risk of supply disruption outweighed the impact of US inventory data released yesterday that showed stockpiles of heating oil, all-important during the northern hemisphere winter, had increased, after mild weather in key consuming regions reduced demand.