Oil prices rose above $140 in Asian trade this morning but remained below record highs in a market underpinned by continued Middle East tension and a weak US currency, analysts said.
New York's main oil futures contract, light sweet crude for August delivery, was up 48 cents at $140.48 a barrel from its close of $140.00 yesterday at the New York Mercantile Exchange.
The New York contract rose to an intra-day record of $143.67 during US trading hours.
Brent North Sea crude for August delivery gained 55 cents to $140.38 dollars. The contract set a trading record of $143.91 before settling at $139.83 yesterday in London.
Tension over crude producer Iran and its nuclear ambitions, which Tehran says are peaceful, has once again renewed worries about possible supply disruption from the oil-rich Middle East.
The commander of the US navy's Fifth Fleet warned that the United States will not allow Iran to shut the strategic Strait of Hormuz, the Gulf sea lane through which much of the world's oil is supplied.
The weak US currency, which makes crude and other dollar-priced goods more affordable for purchasers with stronger currencies, was the other factor driving up the oil futures market, analysts said.
"A weaker dollar means more inflation and so everybody is coming back into the commodity market," said Tony Nunan, a manager with Mitsubishi Corp's international petroleum business in Tokyo.
Analysts expect the European Central Bank (ECB) to raise interest rates this week, which would push the euro higher against the dollar since euro-denominated investments would provide greater yields.
"I think the big thing now is going to be interest rates," said Mr Nunan.
Global oil prices have doubled in the past year and have continued to soar since they breached $100 for the first time at the start of 2008.
The rising prices have triggered fears over inflation and slower economic growth, and sparked protests around the world.
Consumer countries blame record prices on tight supplies amid strong demand and fears about supply from nations such as Iran, Iraq and Nigeria. In particular, they accuse the Organisation of the Petroleum Exporting Countries (Opec), of not producing enough crude. The 13-nation Opec however, insists that the weak dollar is at fault.
Meanwhile, leaders in Nigeria's Niger Delta agreed to government-backed talks aimed at halting attacks that have cut the key producer's oil output by almost a quarter, a statement from Vice-President Goodluck Jonathan's office said.
Bangladesh yesterday became the latest Asian nation to announce an increase in state-set fuel prices. Similar moves in other countries have already begun to affect regional demand, some analysts have said.
Bangladesh raised prices between 34 and 66 per cent.
Leading figures in the oil world gathered in Madrid for a conference discussing record-high crude prices, but found themselves divided about the causes.