Oil jumps more than $2 on U.S.-Iran tensions

NEW YORK (Reuters) - Oil prices jumped more than $2 to above $118 a barrel on Friday on supply disruptions in Nigeria and the North Sea and fresh tensions between the United States and Iran.

U.S. crude futures settled $2.46 higher at $118.52 a barrel, after hitting $119.55 in earlier activity, near the all-time peak of $119.90 reached on Tuesday.

London Brent crude gained $2 to settle at $116.34 a barrel, after hitting a record $117.56 earlier.

A cargo ship hired by the U.S. military fired warning shots at boats suspected to be Iranian, the U.S. Navy said on Friday, underscoring tension in the Gulf as the Pentagon sharpened its warnings to Tehran.

Iran denied there had been any confrontation between its forces and a U.S. ship, Iranian media reported.

Tensions between Washington and the OPEC nation last year helped send oil to then-record highs. Crude prices have surged more than five-fold since 2002 as supplies struggle to keep pace with rising demand in emerging economies, such as China.

Oil also found support on Friday from lost in Nigerian production due to a workers strike and rebel attacks and from disruptions caused by a planned refinery strike in Scotland.

In the North Sea, BP (BP.L) said it had begun shutting down its UK Forties oil pipeline in preparation for a two-day strike at a major Scottish refinery this weekend.

The 700,000-barrel-a-day Forties pipeline carries about half of Britain's North Sea oil production.