New York's main contract, West Texas Intermediate crude for delivery in February gained 45 cents to $101.32 in morning trade. Brent North Sea crude for February delivery was up 73 cents to $112.97.
"The US/European-led sanctions on Iran look to tighten and have caused some Asian buyers to begin to look to alternative supplies," said Sanjeev Gupta, who heads the Asia-Pacific Oil & Gas practice at Ernst & Young.
"Iran's threat to disrupt shipping through the Straits of Hormuz is keeping markets on edge, particularly Asian markets."
Western powers are moving to tighten sanctions on Iran, accusing the country of trying to develop nuclear weapons.
And on Thursday that pressure was increased when Japan pledged during a visit by US Treasury Secretary Tim Geithner to cut the amount of oil it imports from Iran.
Tehran has denied the nuclear allegations, saying its atomic programme is for peaceful purposes and has threatened to block the strategic Strait of Hormuz if fresh sanctions are imposed, a move that could further escalate tensions.
Traders were also closely following mounting unrest in Nigeria, Africa's major crude oil producer and exporter.
Tens of thousands of protesting Nigerians defied an order to end a three-day-old strike Wednesday as unions threatened oil production and a mob rampaged in one city, leaving a police officer dead.
Concerns over Iran and Nigeria overshadowed data showing softer US energy demand, which would have normally dampened oil prices.
The US Department of Energy said crude stockpiles jumped by five million barrels last week in the world's biggest oil consumer, five times the amount forecast by analysts For the latest updates on the stock market, visit Stock Market Today For the latest updates PRESS CTR + D or visit Stock Market news Today
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