Analysts said oil's rally could run further if problems with US mortgage companies Fannie Mae and Freddie Mac feed into the commodities boom by reducing the chances of an interest rate hike by the Federal Reserve.

The troubles with the mortgage giants, which control US$5 trillion in debt, helped pare crude's gains after it hit new highs as dealers focused on US economic turmoil that has already slowed oil consumption in the world's top energy user.

US crude settled at US$145.08 a barrel, up US$3.43, after climbing as high as US$147.27 earlier in the day and adding to gains of US$5.60 from July 10. London Brent crude settled at US$144.49 a barrel, up US$2.46.

Meanwhile, missile tests this week by Iran, against a backdrop of rising tensions with the US, has left the oil markets worried about a potential supply disruption from the world's No. 4 exporter.

Iran has threatened to strike back at Tel Aviv and US interests in a key oil shipping route if it is attacked over its nuclear programme, which the West fear is aimed at making weapons.

Oil prices have risen seven-fold since 2002 amid surging demand from China and other emerging markets, and jumped 50 percent this year alone, battering the economies of consumer nation's already hit hard by the global credit crunch.