NEW YORK - World oil prices Monday hit new highs for 2007 as the market fretted over rising tensions between the West and major crude producer Iran.
New York's main oil futures contract, light sweet crude for delivery in May, gained 63 cents to close at 62.91 dollars. Earlier Monday it reached 63.30 dollars -- last seen on December 21.
In London, the price of Brent North Sea crude for May delivery rallied 1.20 dollars to settle at 64.41 dollars a barrel in electronic deals. It had earlier struck 64.50 dollars -- the highest point since December 4.
The Iran situation is adding a "geopolitical risk premium to crude prices, with many market participants concerned that the (nuclear) situation could escalate, potentially leading to Iran using oil as a bargaining tool," Sucden analyst Michael Davies said in London.
The White House on Monday urged Iran to rethink a threat to limit cooperation with the UN nuclear watchdog agency and insisted Tehran bow to international demands to freeze sensitive atomic work.
"We would urge them not to go down that road," said spokeswoman Dana Perino.
Iran, the world's fourth-biggest producer of oil, said Sunday it would restrict its cooperation with the UN nuclear watchdog in retaliation for fresh Security Council sanctions over its disputed atomic program.
The United Nations Security Council voted unanimously Saturday to impose the sanctions in a bid to pressure Iran into freezing its uranium enrichment program.
The decision followed word on Friday that Iran had seized 15 British sailors in the Gulf, a move that roiled the market.
"This is just the kind of scenario we've worried about with all these military assets operating so close together, Iran being in the midst of a new round of war games in the region," said John Kilduff at Fimat USA.
"Market participants are mindful of the 20 percent of the world's supply which passes through the Strait of Hormuz, which is well within Iran's technical prowess to close.
EU foreign policy chief Javier Solana said he would attempt to contact Iranian leaders Monday to discuss the fate of the British sailors being held by Iran.
An Iranian official said the navy personnel were being interrogated and would have to answer to allegations they violated Iranian waters.
"The case of the Britons who violated Iranian territorial waters is following the due legal process and they must answer for their violation," deputy foreign minister Mehdi Mostafavi said, state television reported.
03/26/2007 20:02 GMT