Oil futures rose Monday for a third consecutive session as the escalating Israel-Hamas conflict triggered political tensions in the oil-rich Middle East.
Russia's dispute with Ukraine over natural gas and new unrest in Nigeria also helped oil rise.
"Geopolitical disputes are likely to provide support to sentiment in the short term," Nimit Khamar, an analyst at Sucden Financial Research, wrote in a note. "But it remains to be seen if supply cuts [due to the disputes] are deep enough to match the reduced global demand expected in 2009."
Crude oil for February delivery was last up $1.13, or 2.4%, at $47.46 a barrel on the New York Mercantile Exchange. It rose to $48.68 earlier.
Thousands of Israeli troops backed by tanks and helicopter gunships entered the Gaza Strip over the weekend and fought Hamas militants at close range. Neither Israel nor Palestine controls oil suppliers, but the military conflict has raised tensions in the Middle East.
An Iranian Revolutionary Guard commander on Monday urged Islamic nations to use crude as a weapon to exert pressure on Western backers of Israel, according to the Associated Press. Iran is the world's fourth-biggest oil producer.
Meanwhile, Russia's dispute with Ukraine over natural gas exports continued. European Union officials are due to meet in Brussels Monday afternoon to discuss the implications of Moscow's decision last week to cut off supplies. Read more.
Further pressure on supply could come from Nigeria, Africa's biggest oil producer. The Movement for the Emancipation of the Niger Delta, the nation's main militant group, threatened Sunday to end its ceasefire and provide youths with training and explosives to bomb oil infrastructure, according to Dow Jones Newswires.
Roughly 600,000 barrels a day of production, or one quarter of Nigeria's effective pumping capacity, has already been lost for many months because of past militant attacks, the newswires reported.
Crude had been falling in early Monday trading, pushed lower by a rising U.S. dollar. The greenback recently reduced its gains. See Currencies.
Dollar strength typically weighs on dollar-denominated commodities such as oil and gold, because it makes them more expensive for holders of other currencies.
Also on the Nymex Monday, February reformulated gasoline gained 3% to $1.1433 a gallon and February heating oil rose 3% to $1.5246 a gallon.
February natural gas futures fell 1% to $5.912 per million British thermal units.
