Spain's announcement of an austerity budget also helped lift the market as it eased fears over an escalation of the eurozone crisis, analysts said.
New York's main contract, light sweet crude for November, was up 43 cents at USD 92.28 a barrel in the morning and Brent North Sea crude for delivery in November added 14 cents to USD 112.15.
"Tensions between Iran and the West reinforced concerns about potential supply disruptions," Phillip Futures said in a market commentary.
"Israeli Prime Minister Benjamin Netanyahu drew his 'red line' for Iran's nuclear programme in a speech at the United Nations... and voiced confidence the United States shares his view," it added.
Western powers have been pressuring Iran to halt its nuclear programme but Tehran has insisted its efforts were solely for peaceful purposes.
Madrid unveiled it 2013 budget focussed on spending cuts and featuring structural reforms agreed with the European Union, bringing relief to the crisis-weary eurozone as it pointed to a full bailout of the debt-strapped nation.
IG Markets Singapore said in a commentary the budget is "widely seen as the first step to approaching the EU for a full bailout as it gets its house in order".