World oil prices jumped this evening to new nine-month highs, driven by fresh geopolitical worries over key crude producer Iran.
Brent North Sea crude for delivery in April soared as high as $123.07 a barrel and New York's main contract, light sweet crude for April, jumped to $106.47 - levels last seen in early May 2011.
Iran returned to the market spotlight, driving a recovery from earlier losses on concerns of weaker global demand after poor economic data and doubts over Greece's latest bail-out.
Analysts said that Brent hit a nine-month high today, despite weaker manufacturing data from China and the euro zone. It emerged today that Iran had denied UN inspectors probing its nuclear weapons activities access to a key military site.
The visit by the team from the International Atomic Energy Agency (IAEA) was aimed at clarifying issues surrounding possible military aspects of Iran's nuclear programme.
Western countries have charged that Iran is attempting to produce an atomic weapon, while Tehran insists that its programme is solely for producing energy and treating cancer patients.
The fruitless IAEA visit to Iran raised tensions, with Russia warning of "catastrophic" consequences if it leads to a military attack on its Middle East ally. France said Iran's refusal to allow the inspectors to see the military site was a "missed opportunity" that could undermine chances of reviving wider talks between Tehran and world powers.
Iran's supreme leader, Ayatollah Ali Khamenei, was defiant, however. He made no mention at all of the failed IAEA bid but instead reiterated the assertion that "the Iranian nation has never been seeking an atomic weapon and never will be."
The IAEA said it had gone into the two-day visit to Tehran - and a previous, inconclusive one last month - in a "constructive spirit" but that no agreement had been reached on efforts to elucidate Iran's nuclear activities.
The US and Europe have been ramping up economic sanctions on Iran since November, when the IAEA published a report crystallising - though not entirely validating - Western suspicions it was pursuing nuclear weapons research in Parchin and elsewhere.
The measures, targeting vital oil exports, added to four sets of non-economic UN sanctions punishing Iran for not giving timely explanations of its nuclear activities. Iran has repeatedly said the sanctions will not deter it from its nuclear ambitions and it has threatened to strike back at any military action, possibly by closing the strategic Strait of Hormuz.
This week, it deployed warplanes, missiles and radar facilities in exercises to boost the defences of its nuclear facilities.
