Brent crude futures settled near a 10-month high above $125 a barrel on Friday, posting a fifth straight weekly gain as heightened concerns over tensions with Iran about its nuclear program and cuts in supply sent oil prices up on both sides of the Atlantic.
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News that Iran has sharply stepped up its controversial uranium enrichment efforts, in a report from the United Nation's International Atomic Energy Agency, pushed both Brent and U.S. crude to their highest intraday peaks since May.
"The IAEA report caused this pop up," said Dan Flynn, analyst at PFGBest Research in Chicago.
Brent April crude rose $1.85 to close at $125.47 a barrel, the highest settlement since April 29. Friday's $125.55 peak was the highest intraday price since May 2.
The weekly gain of 4.93 percent was the best weekly percentage rise since the week to Jan. 6.
U.S. April crude rose $1.94 to settle at $109.77 a barrel, the highest close since May 3, and up a seventh straight session, the longest string of gains since a 10-day stretch starting in late December 2009 and extending into January 2010.
For the week, front-month U.S. crude rose 6.33 percent, strongest weekly gain since the week to Dec. 23.
The IAEA's report came after Iran's ambassador to the body said Tehran wants more talks with the U.N. agency.
Oil markets had already been reacting to fears about supply from Iran after Tehran said on Sunday it has stopped selling crude to British and French companies.
Other European buyers have cut back on purchases from Iran ahead of a European Union embargo on imports of Iran's oil effective July 1 and some of Iran's biggest customers in Asia including China have also reduced purchases.
"The supportive factors are on the supply side - Iran and Iran and Iran, with a bit of Syria and Sudan," said Christopher Bellew, a broker at Jefferies Bache in London. "It would not be at these numbers if it was not for the supply-side problems."
Saudi Arabia increased exports sharply in the past week and was offering extra supplies to its biggest customers worldwide in what industry sources said appeared to be a bid to tame rising crude prices.
U.S. Treasury Secretary Timothy Geithner said on CBNC television there was a case to tap the nation's strategic petroleum reserve in some circumstances.
Last summer, the Obama administration joined other Western nations to release a total of 60 million barrels of oil in response to supply disruptions in Libya.
The Syrian Arab Red Crescent evacuated wounded or sick women and children from the Baba Amro district of the besieged city of Homs on Friday as international pressure mounted on the Syrian government to open the country up to humanitarian aid.
Crude futures' recent rally has pushed a closely watched technical indicator, the relative strength index, above 80 for both Brent and above 70 for U.S. crude. A reading above 70 is considered a signal of an overbought condition by technical traders, and a possible headwind for the current rally.
Brent's premium to U.S. crude
Inventories at Cushing, the delivery point for the U.S. light sweet crude contract, fell last week. The Brent/U.S. crude spread had widened to more than $20 earlier in the month on rising stocks in the U.S. Midwest.
U.S. crude trading volume was 9 percent above the 30-day average, with Brent turnover lagging, 16 percent under its 30-day average.
A drop in new U.S. single-family home sales in January was not seen as supportive, though an upward revision to the prior months' data and a drop in the supply of properties on the market soothed the disappointment.
The Thomson Reuters/University of Michigan's final reading on the overall index on consumer sentiment edged up in February to the highest in a year, also helping offset investor worry about the slip in new home sales.
U.S. stocks were little changed, hovering around highs not seen since June 2008, while energy shares gained alongside crude oil prices.