Brent crude climbed to near $124 on Monday, rebounding from a drop of 2 percent the previous session as another refiner announced cuts to Iranian imports, feeding fears of a supply crunch as the West presses ahead with sanctions on Tehran, Reuters reported.
Relief that China's 2012 growth target came in as expected at 7.5 percent reassured investors that the country would continue to propel steady demand for oil, while a delay of up to four more days in restarting Enbridge Inc's (ENB.TO) oil pipeline system in the U.S. Midwest also provided support.
As sanctions against the world's fifth largest oil exporter Iran over its nuclear program make trade in its oil more difficult, its biggest customers including China, Japan and India are reducing imports from Tehran, even as Middle East supply risks remain.
Front-month Brent rose 26 cents to $123.91 a barrel by 0601 GMT. Brent fell 2 percent on Friday after Saudi Arabia denied a media report of an explosion at a Saudi oil pipeline that had helped Brent crude prices shoot up $5 to $126.20, their highest level since 2008.
U.S. April crude on Monday rose 21 cents to $106.91 a barrel after settling $2.14 lower at $106.70.
The latest company to cut Iranian oil imports is India's Mangalore Refinery and Petrochemicals Ltd (MRPL) which plans to cut its yearly Iranian oil import deal by as much as 44 percent to 80,000 barrels per day in 2012/2013.
Saudi Arabia's current spare capacity is 2.5 million bpd while production is now at 9.8 million bpd, the country's deputy oil minister Abdul Aziz Bin Salman bin Abdulaziz said last week, adding that his country's main concern was to keep the global oil market well supplied.
In a possible response to additional demand, Saudi Arabia has raised the price of its flagship Arab Light crude oil for customers in Asia, who buy more than half of its crude exports, by $1.25 a barrel for April.
Edited by: S. Isayev