London: Oil hit a nine-month high near $72 yesterday, propelled by a strike threat to Nigeria's hobbled output and a report by UN nuclear monitors that opened the way to tougher sanctions against Iran.

London Brent crude, now a more accurate indicator than US oil, was up $1.10 at $71.70 a barrel by 1441 GMT, after hitting $71.80, the highest since August 28, 2006. US crude traded down 10 cents at $65.67.

Prices steamed higher on Wednesday after US warships put on a show of force off Iran's coast, coinciding with a report by UN monitors that Tehran had expanded its nuclear programme.

On Thursday the US navy began war games.

"That played into the price action...It was a knee-jerk reaction to the headlines," said Mike Wittner of investment bank Calyon.

The rally accelerated yesterday when workers at Nigeria's state oil company began an indefinite strike and unions said they would target oil output if their demands were not addressed within days. Militant attacks have already shut nearly a quarter of production in the world's eighth-biggest oil exporter.

The Iran tension and new threat to Nigeria's exports added to concerns about fuel supplies in the world's top consumer the United States, where gasoline inventories have been rising but remain below average ahead of peak summer demand.

"The gasoline situation remains critical...Stocks stand at a seasonal low with the driving season officially set to kick off this weekend," Citigroup said in a research note.

Militant attacks have cut production of gasoline-rich crude from Nigeria by 695,000 barrels per day.

"Two big things are keeping prices up, the Nigerian and gasoline situation," said Tony Nunan of Mitsubishi Corp.