Mumbai: Crude oil stood firm at a new record 12-month high of nearly $121 a barrel amid supply constraints in Nigeria and Iran and signs of rising US demand.

Supply disruptions in Nigeria, where a strike and attacks by militants hit production at Royal Dutch Shell and tensions with Iran helped oil prices stay higher.

US light crude for June delivery touched a record $120.93 before declining to $120.04 a barrel at 1155 GMT. London Brent crude rose to a record $119.07 a barrel before falling to $118.32 a barrel.

Brent crude for June settlement also rose to a record, gaining as much as $1.08, or 0.9 per cent, to $119.07 and was trading at $118.09 at 1:39 pm In London. Brent rose to a record close of $117.99 on London's ICE Futures exchange on Monday.

Oil prices have nearly doubled in the past year and is up by a quarter since the start of 2008 partly due to the problems in Nigeria and weakness in the US dollar, which has boosted the price of commodities denominated in the US currency.

The falling dollar has been driving speculative investments in dollar-denominated crude and other commodities as doubts about the health of the US economy lingered.

Analysts expect oil prices to rise to between $150 and $200 a barrel within two years because of a lack of adequate supply growth.

Exxon Mobil's Nigeria unit is expected to return to normal production of about 860,000 barrels of oil a day by the middle of the week following the settlement of a labor strike last week, a government spokesman said.