Oil held above $72 a barrel in early trade today on fears Iran's intensifying dispute with the West may lead to a supply cut from the world's fourth largest exporter.
London's Brent crude fell 13 cents to $72.38 a barrel at 10.30am, just off the record of $72.64 hit yesterday.
Brent has hit fresh records in each of the last six sessions as the loss of a quarter of Nigerian oil supply has tightened European markets more than the US, where crude stocks are at their highest level for nearly 8 years.
US May crude oil futures fell 40 cents to $70.95 a barrel, after hitting a record of $71.60 yesterday.
The price of oil has trebled since the start of 2002 and is nearing the inflation-adjusted peaks above $80 a barrel reached in the early 1980s, just after the Iranian Revolution.
The high prices have sounded alarm bells in consuming nations fearful of an economic hit. Tensions over Iran have fuelled a $13 rally on Brent so far this year.
Yesterday, the US failed to secure international support for targeted sanctions against Iran and President George W. Bush refused to rule out nuclear strikes if diplomacy failed to curb the Islamic Republic's atomic programme.
"All options are on the table. We want to solve this issue diplomatically and we're working hard to do so," Mr Bush said.
The United States, which already enforces its own sweeping sanctions on Iran, wants the Security Council to be ready for strong diplomatic action, including a freeze on assets and visa curbs on Iranian officials.
Tehran has vowed to continue its pursuit of nuclear technology and, yesterday, warned that the Iranian army would powerfully defend any attack on the country.
The International Energy Agency (IEA) said the world would be able to compensate for an Iranian outage with government-held reserves for four years, IEA head Claude Mandil told France's RFI radio today.
But that would leave no crude stocks to meet any other global supply problems.
Ministers from the Organization of Petroleum Exporting Countries (OPEC) will consult informally next week on the sidelines of an energy forum in Qatar, OPEC sources said.