NEW YORK, July 28 (Xinhua) -- Oil prices settled higher after a volatile session on Monday as geopolitical tensions in Iran and Nigeria overshadowed the flagging fuel demand.
Light, sweet crude for September delivery rose 1.47 U.S. dollars to settle at 124.73 dollars on the New York Mercantile Exchange. Price rallied to 125.22 dollars a barrel in the early morning trading.
In London, Brent crude for September delivery gained 1.32 dollars to settle at 125.84 dollars a barrel on the ICE Futures Exchange.
Iranian President Mahmoud Ahmadinejad said Saturday that Iran now has 6,000 centrifuges, the uranium-enriching machines, which doubles the previous estimates by Western countries. The tension in the OPEC's second-largest exporter revived the market's concerns about the potential disruption in oil production in the area.
Meanwhile, Nigerian rebels attacked two oil pipelines in the country's oil-rich southern area early Monday. The Royal Dutch Shell PLC, which owns both pipelines, said it had shut down some crude production. Nigeria is Africa's largest oil exporter.
Despite Monday's rally, falling fuel demand continued to weigh on the market. The U.S. Transportation Department said Monday that U.S. vehicle drivers traveled 9.6 million miles less in May than the same time last year, marking a biggest drop in the usually busy summer driving season. Crude oil is still 15 percent down from its all-time peak of 147.27 dollars a barrel achieved on July 11.