World oil prices hit another new nine-month high this evening as traders fretted about the impact of heightened geopolitical tensions in crude producer Iran on stretched global supplies.
New York's main contract, light sweet crude for April, rallied as high as $108.99, touching the highest level since May 2011. It later stood at $108.23, up 40 cents from yesterday's closing level.
Brent North Sea crude for delivery in April gained 21 cents to $123.83 per barrel in London deals. The contract had struck a similar nine-month pinnacle of $124.50 yesterday.
Analysts said that oil prices are continuing to soar on the back of the Iran crisis. UN nuclear inspectors returned from Iran on Wednesday with no progress in their search for answers from Tehran on its alleged bid to develop nuclear weapons, leading Washington to brand the trip a "failure".
Iran has been hit by a raft of economic sanctions by the US, United Nations and the European Union over its refusal to halt uranium enrichment activities. The Islamic republic insists that its nuclear programme is solely for peaceful civilian purposes.
Tehran announced last Sunday that it would halt its limited oil sales to Britain and France in retaliation for a phased EU ban on Iranian crude that is yet to take full effect. The move was largely symbolic, but was seen as a warning shot to other EU nations that are bigger consumers of Iranian oil, including Italy, Spain and Greece.
Although those countries were not affected by Iran's announcement, they are included in an EU decision to stop buying Iranian oil that was announced last month and which will take full effect from July.
Simmering Iran tensions have worsened the global oil supply outlook, which is already stretched by lower output from South Sudan, Syria and Yemen. Oil prices had also rallied yesterday on growing speculation that Japan could decide to slash its Iranian imports by about 20%.
The oil market won further support this week from buoyant economic data in the US and Germany, and after Greek clinched its second euro zone bail-out deal. German business confidence unexpectedly rose to a seven-month high as robust domestic demand helped buffer the European Union's largest economy against the region's debt crisis, data from the Ifo economic institute showed.
Traders were also buoyed by US data showing initial jobless claims holding steady, a sign that the ailing labour market in the world's largest economy and biggest oil consumer was slowly improving.
