Oil prices rose above 126 dollars in Asian trade on Monday over fresh worries about Iran's disputed nuclear programme and a new storm brewing in the Gulf of Mexico, dealers said.
In morning trade, New York's main contract, light sweet crude for September delivery, jumped 1.12 dollars to 126.22 dollars a barrel from its close of 125.10 on Friday.
Brent North Sea crude for September delivery was up 82 cents at 125.00.
"It's Iran again... the Iranian issue remains fluid and it looks like more sanctions will be imposed by the world powers and they will likely raise tensions over Iran," said Victor Shum of Singapore consultancy Purvin and Gertz.
Iran is the world's fourth-largest crude oil producer and traders fear supply disruptions from the Islamic republic if tensions between Tehran and the West heighten over its controversial nuclear programme.
Tensions over Iran's nuclear program pushed oil prices to record levels above 147 dollars in July.
Meanwhile a new storm brewing in the Gulf of Mexico, where key US energy facilities are located, is adding to supply jitters, dealers said.
Tropical Storm Edouard is expected to run parallel to the Louisiana coast and be very near the southwestern coast of Louisiana and the upper Texas coast by late Tuesday.
"Some reports are saying much of the US offshore oil production facilities are in the likely path of the storm but it is a little too early to say what the direction of the storm is going to be," said Shum.
Nigeria, a key crude producer, is also fuelling supply concerns as local police and French officials confirmed Sunday two French nationals were kidnapped in the country's oil-rich Niger Delta region.
Violence in the southern region has reduced Nigeria's total oil production by a quarter since January 2006.
Nigeria was Africa's largest oil producer until it was overtaken in April by Angola, according to Organisation of Petroleum Exporting Countries (OPEC) figures.