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LONDON (Thomson Financial) - Oil continued to trade higher, above the 93 usd mark, as mounting geopolitical tensions in Iran and Nigeria bounced prices back up after recent losses on economic downturn fears.

Prices have been on the back foot since hitting 100 usd in the early days of 2008, with market players fretting that the economic difficulties roiling financial markets could ultimately dent demand for crude. But with the US increasing the pressure on Iran and an upswing in militant activity in Nigeria, prices have found good support above 90 usd.

"At the moment you have this tug of war between bullish and bearish factors," said Bank of Ireland analyst Paul Harris.

"On the bullish side you have the tensions with Nigeria and Iran, but the economic factors are very much in the ascendancy," adding that oil prices have established a firm base above 90 usd, supported in part by the dollar's slide, which makes crude priced in the US currency cheaper for overseas investors.

At 12.27 pm, New York's WTI crude for February delivery was up 83 cents at 93.52 usd per barrel, almost 7 usd away from its record peak of 100.09 usd hit in the first week of January.

London's Brent crude for February delivery was up 90 cents at 91.97 usd per barrel.

Yesterday, US President George W. Bush described Iran as "the world's leading state-sponsor of terror," saying the Islamic Republic should be confronted, "before it's too late."

Oil prices came off slightly towards the end of last year after a US intelligence report showed Iran had halted its nuclear weapons programme, but the Bush administration has continued to ratchet up the pressure, heightening fears Iran could target crude supplies in the event of a US led attack.

Israel warned today that all options remain on the table against Iran, who it fears is still trying to obtain nuclear weapons under the cover of an atomic energy programme.

"We are not ruling out any option," a senior government official quoted Prime Minister Ehud Olmert as telling parliament's foreign affairs and defence committee.

On Friday, Nigerian militants claimed responsibility for an explosion on an oil tanker in Port Harcourt. While the Nigerian government has disputed the claim by the Movement for the Emancipation of the Niger Delta (MEND), blaming the explosion on technical faults rather than a remote controlled bomb, threats from militant groups have increased in recent weeks.

"Violence in Nigeria is on the increase and in the short-term looks like getting worse," said MF Global senior broker Robert Laughlin. Attacks by militants fighting for a greater control of the Niger Delta region's oil wealth have shut-in around a fifth of production in Africa's largest exporter of crude.

With tight crude global crude supplies helping push prices up towards the 100 usd region, market watchers fear any disruption to exports could create further price spikes.

French President French Nicolas Sarkozy today decried record crude prices during a visit to Saudi Arabia, the world's largest producer of oil, saying he was concerned by the "brutality" of recent oil price increases which "are affecting growth and purchasing power."

OPEC is due to meet for a special meeting on February 1 to discuss production levels given the recent rise in oil prices, which many fear could contribute to a slowdown in global growth as well as rising inflation.

The cartel, which produces around 40 pct of the world's oil supplies, has consistently blamed recent price rises on market speculation, rather than a lack of crude in the market, despite declining global stockpiles.

Qatar's Energy Minister Abdullah al-Attiyah yesterday said it was still too soon for OPEC to make a decision on output policy.

The cartel held production quotas steady at its last meeting in December, but agreed to convene a special get together for February to review its position.

Market views are mixed as to whether any production hike is in the offing, as the cartel weighs possible demand destruction from high prices and the effects of a possible global slowdown against the impact the recent dollar weakness has had on members' revenues and currency reserves.