The Iran problem is one of a number that has propped up oil prices
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Oil prices have risen sharply on news that Iran will no longer allow snap inspection of its nuclear sites.
The price of US light, sweet crude rose $1.01 to $66.38 a barrel, while Brent crude rose 97 cents to $64.38 a barrel.
President Mahmoud Ahmadinejad ordered the country's nuclear agency not to allow inspections from Sunday.
Iran said it would press ahead with full-scale uranium enrichment despite the UN's nuclear watchdog voting to report Tehran to the Security Council.
'Clear message'
The US and Europe are concerned that Iran's efforts to build nuclear power stations could in fact be hiding attempts to also develop nuclear weapons.
On Saturday, the UN's International Atomic Energy Agency (IAEA) voted in favour of reporting Iran to the Security Council.
The move could lead to eventual sanctions against Iran, although any action has been put off until a report by the head of the IAEA, Mohamed ElBaradei, on 6 March.
Meanwhile, US President George W Bush said the move "sent a clear message to the regime in Iran" that it could not gain nuclear weapons.
Iran said it would no longer allow snap UN checks of its nuclear sites and would also end its suspension of full-scale uranium enrichment.
However, it said it was willing to discuss Moscow's proposal to shift large-scale enrichment operations to Russia in an effort to soothe any fears that it planned to make nuclear weapons.
And last week it moved to reassure the West that it did not plan to reduce its oil exports, despite possible UN sanctions.
Oil as a weapon
But oil traders fear that the UN move could restart last year's rally that saw crude oil prices hit a record high of $70.85.
"While the market had factored in the potential consequences of reporting Iran to the UN, when it actually happens prices take the effect further," said David Thurtell, an analyst at the Commonwealth Bank of Australia.
"Iran is clearly not happy," he added. "While it said last week it would separate nuclear and oil as issues, it was only last year it said oil could be used as a weapon to get its own way on nuclear.
"This all adds fuel to the fire for those concerned about oil supply."
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