Oil prices surged higher today after Washington set the weekend as a deadline for key crude producer Iran to reply to an international offer of incentives for a freeze in its nuclear drive.
In reaction, New York's main contract, light sweet crude for September delivery, leapt as high as $128.60 a barrel, before pulling back to stand at $126.76, up $2.68 from Thursday's close.
Brent North Sea crude for September delivery soared as high as 127.94 this evening. It later stood at $126.20, up $2.22 from Thursday.
Prior to the news, prices had fallen in earlier trade as weak US economic growth data reignited concerns about slowing demand in the world's biggest energy consuming nation, traders said.
Iran is the world's fourth-largest crude oil producer and tension over its nuclear programme helped push crude prices to record highs above $147 a barrel on July 11. The US and other major powers suspect Iran's nuclear drive is aimed at making weapons, but Tehran insists its objective is energy production.
