New York's main contract, light sweet crude for November delivery, rose 13 cents to close at 66.02 dollars a barrel.

Brent North Sea crude for November delivery climbed 29 cents to settle at 65.11 dollars in London trade.

Prices swung higher as world leaders demanded that nuclear inspectors from the International Atomic Energy Agency (IAEA) be granted access to a previously secret Iranian plant and threatened to impose tough new sanctions on Tehran.

Iranian President Mahmoud Ahmadinejad brushed off the criticism and said the facility had been disclosed to international inspectors and was "perfectly legal."

"Traders have to beware if this evolves into a military conflict because Iran sits on the straits of Hormuz, where 20 percent of the world's oil flows though on a daily basis," said Phil Flynn at PFGBest Research.

"If this had happened three years ago, oil might have run up 10 dollars a barrel or more. Yet now, the impact will be much less as a world awash in oil and spare production capacity can more than make up any loss of Iranian supply."

US President Barack Obama, French President Nicolas Sarkozy and British Prime Minister Gordon Brown announced that Tehran had admitted to the United Nations nuclear watchdog that it had built a second uranium enrichment plant.

The Western leaders made it clear that they did not believe the site served civilian purposes, with a US official describing it as having "the right size" to produce weapons grade uranium but of no use for nuclear fuel production.

Some analysts said oil was helped by news emerging from the Group of 20 summit of leading industrialized and developing nations that leaders would maintain emergency economic stimulus measures until a sustainable economic recovery manifests itself.

Prices were also supported by a research note from Goldman Sachs, which maintained forecasts for crude at 85 dollars by the end of the year and an average of 90 dollars in 2010.

Oil closed down more than three dollars on Thursday, as mixed US economic data and signs of sluggish US energy demand highlighted fears about a tepid recovery from the global recession.

Prices have also been pressured by this week's data showing a large jump in US crude oil inventories -- a sign that energy demand remains weak.

Energy demand has plunged after the global economy slipped late last year into its worst recession since the 1930s.

This sent oil prices tumbling from historic highs of more than 147 dollars in July 2008 to around 32 dollars in December.

Prices have since recovered somewhat but investors remain concerned over the pace of the upturn.

burs/rl/oh

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