Oil prices have risen sharply to well above $63 following the dispute with Iran over 15 captured UK personnel.
Tensions also rose following a UN Security Council vote on Saturday to impose harsher sanctions on Iran over the country's nuclear programme.
"Some political risk premium is coming back into oil prices," said Andrew Harrington at ANZ Global Resources.
A barrel of Brent Crude oil for May delivery was up 71 cents at $63.88. US light oil was trading at $62.96. Oil prices have now reached their highest level this year.
"Some political risk premium is coming back into oil prices," said Andrew Harrington at ANZ Global Resources.
A barrel of Brent Crude oil for May delivery was up 71 cents at $63.88. US light oil was trading at $62.96. Oil prices have now reached their highest level this year.
Iran said the UK naval personnel were arrested on Friday in its territorial waters. UK and US officials have denied this account, with Britain's Prime Minister Tony Blair calling their detention "unjustified and wrong".
"The situation in the Middle East has become much more uncertain and the risk of tensions intensifying has underpinned the rise in oil prices," said David Moore at Commonwealth Bank of Australia.
Oil traders were also worrying over the situation in Nigeria, where three abducted foreigners were still missing.
One Dutch citizen was abducted in Nigeria's oil capital Port Harcourt, while two Chinese nationals were kidnapped nine days ago in the south-eastern state of Anambra. All three are still missing.
"The situation in the Middle East has become much more uncertain and the risk of tensions intensifying has underpinned the rise in oil prices," said David Moore at Commonwealth Bank of Australia.
Oil traders were also worrying over the situation in Nigeria, where three abducted foreigners were still missing.
One Dutch citizen was abducted in Nigeria's oil capital Port Harcourt, while two Chinese nationals were kidnapped nine days ago in the south-eastern state of Anambra. All three are still missing.
