Oil rises more than $1 as tropical storm threatens supply

Oil futures rose more than a dollar with Brent climbing above $115 per barrel, on supply worries as Tropical Storm Isaac threatened to interrupt most U.S. offshore oil production in the Gulf of Mexico. Oil prices got a further boost from hopes of more U.S. stimulus measures, which would improve the outlook for demand from the world's top consumer of oil.

Brent crude futures had climbed $1.26 to $114.85 a barrel by 0824 GMT, after rising to a high of $115.50 earlier in the session. U.S. crude was up $1.13 at $97.28.

Oil prices fell on Friday after a report that the International Energy Agency is likely to tap strategic oil reserves as soon as September, dropping its resistance to a U.S.-led plan. But prices are now turning upwards ahead of the annual U.S. Jackson Hole meeting of central bankers and economists later this week, where Fed Chairman Ben Bernanke will deliver a speech that will be scoured for clues on a third round of quantitative easing. The markets will also look for policy signals from the euro zone ahead of a September 6 meeting of the European Central Bank.

Brent oil dips below $114 as supply fears ease

Brent crude oil futures dipped below $114 per barrel as supply disruption concerns faded slightly. Worries about disruption to supply, while still a significant factor, eased after the United States said it did not believe Israel had made a decision to attack Iran.

U.S. Defense Secretary Leon Panetta, who visited Israel two weeks ago, told reporters it was important that military action should be the last resort. His remarks helped ease worries of a conflict after Israeli Prime Minister Benjamin Netanyahu said that most threats to Israel's security were dwarfed by the prospect that Iran could obtain nuclear weaponry.

Brent crude was down 33 cents at $113.70 per barrel after ending up 43 cents at its highest settlement since May 3. U.S. crude fell 42 cents to $93.01 after closing 70 cents higher. Brent has swung between a high of more than $128 per barrel and a low of $88.49 this year as investors' focus has shifted between heightened Middle East supply worries and a weakening growth outlook. The range of nearly $40 is the widest since 2009, when it was $40.91. In 2011 the range was $34.65 and in 2010 $27.33.