Fresh violence in Nigeria and simmering tensions between the United States and major oil exporter Iran also helped to offset the impact of a rising U.S. dollar to boost oil prices.

U.S. light crude for June delivery CLc1 rose $1.01 to $119.53 by 2:03 a.m. EDT (0603 GMT), adding to Friday's nearly $2.50 surge and briefly striking a lifetime high of $119.93 a barrel. Prices are up almost 25 percent since the start of the year.

London Brent crude rose 83 cents to $117.17.

"Supply-side concerns underpinned the oil price," David Moore, a commodity strategist at the Commonwealth Bank of Australia, said in a note to clients.

"Oil supplies from Nigeria have been disrupted by militant attacks and a strike by some oil workers. A strike at the Grangemouth refinery in Scotland has caused significant disruption to supplies from the North Sea," he said.

The 700,000-barrel-per-day (bpd) Forties crude oil pipeline was closed on Sunday as workers went on strike at the neighboring 210,000 bpd refinery after talks over pensions fell through, operator BP (BP.L: Quote, Profile, Research) said.

The refinery, owned by international chemical company Ineos, produces a tenth of Britain's petrol and diesel but also supplies vital steam and power to BP's Kinneil plant that processes the crude oil coming ashore from 70 North Sea fields.

The government has said that there will be no overall shortages of fuel but conceded that there may be some local supply problems.

BP said that assuming it got power back as soon as the strike ended and Forties fields resumed production rapidly, the pipeline could be back in operation within 24 hours but might take a few more days to get back to full flow.

In Nigeria, unidentified gunmen killed five policemen and seized several weapons in a raid on a police station in the oil-rich southern Nigerian state of Rivers on Sunday, a police spokeswoman said.

The attack comes just two days after a strike and attacks by rebels forced Nigeria's two largest oil firms, Exxon Mobil (XOM.N: Quote, Profile, Research) and Royal Dutch Shell (RDSa.L: Quote, Profile, Research), to shut some 369,000 bpd of production.

A step up in tensions between U.S. and the world's fourth-largest crude exporter Iran also fuelled oil's gain.

A cargo ship hired by the U.S. military fired warning shots at boats suspected to be Iranian, the U.S. Navy said on Friday, underscoring tension in the Gulf as the Pentagon sharpened its warnings to Tehran over its nuclear ambitions.

Iran denied there had been any confrontation between its forces and a U.S. ship, Iranian media reported, and said on Sunday a "disastrous situation" facing the United States in Iraq and Afghanistan, coupled with Washington's domestic issues, made any U.S. attack on the Islamic Republic unlikely.

Tensions between Washington and the OPEC nation last year helped send oil to record highs. Crude prices have surged more than five-fold since 2002 as supplies struggle to keep pace with rising demand in emerging economies, such as China.

Concerns over supply disruptions have limited the impact of a rising U.S. dollar, which climbed to a two-month high against the yen on Monday, boosted by the growing view that the Federal Reserve may stop cutting interest rates.

Source: Reuters