Click to play videoNew Delhi: Oil prices on Tuesday jumped 4.2 per cent to over $102 a barrel as tension has peaked between the US and Iran after Iran warned the United States not to return a US aircraft carrier to the Persian Gulf region.
International oil prices settled at $102.96 a barrel on Tuesday, the highest closing price since May 10, 2011, when prices ended the day at $103.88 a barrel.
Iran test-fired two missiles on Monday, the final day of its naval exercises in the Strait of Hormuz, state-run media reported.
Iranian Army Commander Maj Gen Salehi hinted at using newly tested surface-to sea missiles in order to prevent re-entry of the US aircraft carrier.
The US has hit back and dismissed Iran's warning as a ploy to deflect attention from the fact that Iran is facing the heat from the sanctions imposed.
Iran insists that the naval drills were partly to demonstrate its power over the Straight of Hormuz, which is a critical shipping channel and is now threatening to shut it.
The dispute has already pushed up oil prices - with nearly 17 million barrels of oil passing daily through the strait, according to the US Energy Information Agency.
The Strait of Hormuz is a critical shipping lane, with 17 million barrels of oil per day passing through in 2011, according to the US Energy Information Agency.
That's about one sixth of global oil production and nearly 20 per cent of all the oil traded worldwide. Iran itself only exports about 2.2 million barrels of oil a day.
Just last week, Iran issued its initial threat to shut the shipping lane linking the Persian Gulf with the Gulf of Oman. Iran's southern coast borders that entire area.
(With additional information from CNN)
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