Oil tops $126 on Iran tensions and Nigeria violence

PERTH (Reuters) - Oil rose over $1, climbing back above $126 a barrel, on Monday lifted by jitters about Iran's nuclear activities and violence in OPEC member Nigeria.

U.S. light crude for September delivery rose $1.08 to $126.18 a barrel in Globex electronic trading by 6:52 p.m. EDT. The same contract settled up $1.02 at $125.10 a barrel on Friday.

London Brent crude was up 82 cents at $125.

The United States said on Sunday that Iran has left the U.N. Security Council no choice but to increase sanctions on the Islamic Republic for ignoring demands that it halt sensitive nuclear activities.

The U.S. declaration came a day after an informal deadline lapsed for Iran to respond to an offer from the United States, Britain, France, Germany, China and Russia for talks on its disputed nuclear program.

Tehran has not formally responded to the offer. But Iranian President Mahmoud Ahmadinejad said on Saturday that Iran would not back down in its nuclear dispute with the powers, which have supported three rounds of U.N. Security Council sanctions.

In Nigeria, gunmen kidnapped two French expatriates near the country's oil industry hub of Port Harcourt in the restive Niger delta, military and security sources said on Sunday

More than a dozen gunmen late on Saturday ambushed patrons at a local bar in Onne in Rivers state and exchanged fire with navy personnel, resulting in at least three deaths, a security source said.

Tensions over Tehran's disputed nuclear program and violence in Nigeria have been key drivers in oil's rally in recent months, which saw prices surge to a record high of above $147 a barrel in July.

But worries about a slowdown in world economy and high fuel prices hitting consumption in top energy user the United States have since pulled prices lower.

(Reporting by Fayen Wong)