The price of crude oil has gone up to its highest level so far in 2007 amid the heightened tensions surrounding Iran.
It is pushing towards $64 a barrel in New York – and signs are it will increase even further.
The problem surrounds Tehran’s refusal to halt its nuclear programme despite the sanctions brought in by the UN.
The latest developments have renewed market concerns that the world’s fourth-largest oil exporter could one day cut its exports in retaliation.
Iran’s capture of 15 British naval personnel in the Gulf last week has also heightened worries.
Commonwealth Bank of Australia analyst David Moore said: “The situation in the Middle East has become much more uncertain.
“The risk of tensions intensifying has underpinned the rise in oil prices.”
Analysts say concern that civil unrest may intensify in Nigeria ahead of April elections is also sending prices higher.
Thousands of foreign oil workers have left the oil-rich Niger Delta since February last year, when a new militant group staged a series of attacks that forced Royal Dutch Shell to shut down a fifth of Nigeria’s production.
The price of oil in the US has risen by about 25% since crude futures dropped to $49.90 on January 18.