World oil prices rebounded Wednesday on lingering concerns over Western efforts to rein in the nuclear programme of major crude producer Iran.
The energy market will later switch attention to the weekly energy inventories report in the United States, which is the world's top oil consuming nation.
In late morning trade in London, Brent North Sea crude for April increased by 76 cents to $122.74 per barrel.
New York's main contract, West Texas Intermediate (WTI) or light sweet crude for April, gained 59 cents to $105.29 a barrel.
Crude futures had fallen sharply on Tuesday, shedding about $2 on the back of worries over Greece's massive bailout deal and dimmer economic growth prospects in China and Europe.
"Oil prices have been unable to defy the gloomier mood on the financial markets and were caught up in the downward pull yesterday," said Commerzbank analyst Carsten Fritsch.
"This morning, both Brent and WTI have already been able to recoup some of yesterday's losses.
"The supply risks generated by the Iran crisis continue to lend support to prices and are thus preventing any sharper price slump."
Israeli Prime Minister Benjamin Netanyahu ended a visit to the United States on Tuesday with assurances that Washington is prepared to use force to prevent Iran from getting a nuclear weapon.
Netanyahu, who met President Barack Obama and Secretary of State Hillary Clinton during the visit, put the world on notice that his patience was wearing thin and, if necessary, he would launch unilateral strikes.
Iran has denied it is building an atomic bomb, saying its nuclear programme is for peaceful purposes.
Security analysts say a nuclear-armed Iran would alter the balance of power in the politically volatile Middle East.
EU foreign policy chief Catherine Ashton offered Tuesday to resume talks between global powers and Iran in response to Iran's chief negotiator Saeed Jalili's call for negotiations to be resumed at the "earliest" opportunity.
Iran has previously threatened to close the strategic Strait of Hormuz — a transit point for one-fifth of the world's oil supply — if the West imposes further sanctions.
In Europe, traders were also on tenterhooks ahead of fresh news on a bond swap to cut Greek debt and avert default.
Investors are hoping enough of private creditors owed money by Greece will sign up for the debt swap — essentially a 107-billion-euro ($140-billion) writedown of their bonds.
The success of this private debt swap is a key condition for a 130-billion-euro rescue package to save Greece from a debt default and avoid another potential global crisis.
Later on Wednesday, meanwhile, the US government's Department of Energy will publish its inventories data for the week ending March 2.
American crude reserves are expected to jump by 1.1 million barrels, according to analysts polled by Dow Jones Newswires. Petrol or gasoline stockpiles are forecast to fall by 1.4 million barrels.
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