Oil rose to around $63 a barrel today after Iran warned it could use its oil exports as a weapon following the UN Security Council's decision to impose sanctions on its trade in nuclear goods.
News Abu Dhabi was set to be the first to implement a new round of OPEC supply cuts added to the gains that followed two days of losses.
US crude climbed 54 cents to $62.95 a barrel by 12.21pm. Brent crude jumped 66 cents to $63.08.
After months of deadlock, the Security Council agreed on Saturday to impose sanctions on Iran's trade in nuclear materials and technology, drawing a warning from Tehran.
"If necessary, Iran will use any weapon to defend itself," Oil Minister Kazem Vaziri-Hamaneh was quoted as saying by the semi-official Fars news agency today. In the past he has said Iran would prefer not to play the oil card.
Iran, the world's fourth-largest crude producer, has condemned the resolution as illegal and on Sunday vowed to speed up enrichment work, which could heighten tensions.
Oil prices rose earlier in the year in response to fears Iran might cut its oil exports or disrupt Gulf shipping as its row with the West over its nuclear program escalated. The issue had faded since summer as the UN appeared unable to agree on how to deal with Tehran.