Oil climbed above $69 today with London Brent crude hitting a new record high, ahead of US data expected to show falling stocks and uncertain supplies from major exporters.
US crude traded 19 cents up at $69.17 a barrel by 6:49am, after a 24-cent gain yesterday, to take prices up 2.6 per cent this week and within sight of a record $70.85 hit last August.
"Falling stocks coupled with greater and greater focus on geopolitics is keeping the oil price afloat at these high levels," said Andrew Harrington, resources analyst at ANZ.
"We've moved beyond and above the levels where fundamentals count as much as what happens in Iran or Nigeria," he said.
Yesterday Iran proclaimed it had begun uranium enrichment, which it says it will build to industrial-scale for power generation or possible nuclear weapons.
US President George W. Bush has dismissed reports of plans for military strikes on the world's fourth-biggest oil exporter as "wild speculation", but traders fear diplomatic efforts may falter and that any potential sanctions could lead Tehran to disrupt oil supplies.
US gasoline supplies are already under pressure as demand edges higher, imports fall and an extensive refinery maintenance programme to comply with cleaner fuel standards hits output.
Meanwhile China's March crude imports rose 11 per cent, helping first-quarter imports to grow 25 per cent from the previous year raising the possibility of a demand resurgence in the world's second-largest oil consumer.
Oil is riding a rally that has seen it jump about $50 a barrel since the start of 2002, with investors driving a raft of commodities towards record highs and the global economy and growing demand so far proving resilient to soaring fuel costs.