Oil rises as eyes back on Iran-Israel row

SINGAPORE (Reuters) - Oil rose on Tuesday after slipping from a record above $143 a day ago, as tension surrounding Iran's nuclear programme returned to focus and outweighed concerns over eroding U.S. demand.

U.S. crude rose 39 cents to $140.39 a barrel by 0201 GMT (3.01 a.m. British time), while London Brent crude rose 76 cents to $140.59.

Fears of oil supply and flow disruption in the Middle East, as the Iran-Israel row over Tehran's nuclear developments escalates, had helped pushed oil to a $143.67 peak on Monday.

"The market has been worried about the tensions involving Iran and that remains a supportive factor for the oil price," said David Moore, a commodities analyst at the Commonwealth Bank of Australia in Sydney.

In a war of words between the Iranian and U.S. military, Iran's Revolutionary Guard said Tehran would impose controls on shipping in the Middle East Gulf and Strait of Hormuz if it were attacked.

The U.S. Navy's Fifth Fleet said the United States and its allies would not allow Iran to hamper shipping in the Gulf.

Roughly 40 percent of the world's traded oil moves through the narrow waterway separating Iran from the Arabian Peninsula.

The ongoing dispute in the Middle East countered concerns over falling demand in the world's top oil consumer, the United States, as the impact of soaring fuel costs sets in.

The U.S. Energy Information Administration revised downward U.S. April oil demand by 863,000 barrels per day (bpd) to 19.77 million bpd -- 3.9 percent below year-ago levels.