NEW YORK - Oil prices jumped higher Friday after Washington set the weekend as a deadline for key crude producer Iran to reply to an offer of incentives for a freeze in its nuclear drive.
"We expect a response this weekend," Gonzalo Gallegos, a State Department spokesman, said without specifying Saturday or Sunday.
In reaction, New York's main contract, light sweet crude for September delivery, leapt as high as 128.60 dollars per barrel, before retreating to close at 125.10 dollars, marking a gain of 1.02 dollars from Thursday's finish.
In London, Brent North Sea crude for September delivery soared as high as 127.94 on Friday. It subsequently settled up 20 cents at 124.18 dollars.
Prior to the news, prices had fallen in earlier trade as weak US economic growth data reignited concerns about slowing demand in the world's biggest energy consuming nation, traders said.
Iran is the world's fourth-largest crude oil producer and tension over its nuclear program helped push crude prices to record highs above 147 dollars a barrel on July 11.
The United States claims Iran's nuclear drive is aimed at making weapons, but Tehran insists its objective is energy production.
Iranian Foreign Minister Manouchehr Mottaki said Thursday there was no deadline and that his country had already replied. The US State Department had been vague about the deadline but narrowed it down on Friday.
A diplomatic source in Brussels said an Iranian response could come in the next few days.
During a visit to Washington, Israel's deputy Prime Minister, Shaul Mofaz claimed that Iran was playing for time and was heading for a "major breakthrough" in its nuclear capability.
Oil prices had tumbled on Thursday and earlier Friday after weaker-than-expected US growth figures stoked fresh worries about the outlook for global energy demand.
NAM backs Iran's right to peaceful nuclear energy
The 15th meeting of the 118-nation Non-Aligned Movement (NAM) foreign ministers wound up on Wednesday releasing a final statement and a document on Iran's peaceful nuclear activities.
In the document about Iran's nuclear issue, participating delegates voiced their support for the country's peaceful nuclear program.
The meeting endorsed a statement on the Iranian nuclear dossier, underlining Iran's right to obtain nuclear technology for peaceful purposes.
The statement urged bodies concerned with the dossier to go ahead with negotiations to find a peaceful way out of the crisis.
They have also referred to the International Atomic Energy Agency (IAEA) as the only legitimate source to study nuclear activities of its member states.
The 380-article NAM communique covered all political, economic, social, cultural and media matters concerning NAM countries and the world, mainly food security, climate change and energy.
The NAM member states consider themselves not formally aligned with or against any major power bloc.
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