Oil prices rose Monday boosted by a higher euro and reports that the US Navy fired on a small vessel in the Gulf off Dubai.
Oil prices held onto their gains even after a United Arab Emirates official said the vessel carried Indian fishermen, one of whom was killed and three others wounded.
New York's main contract, WTI light sweet crude for August, gained $1.33 from late Friday's price to $88.43 per barrel.
Brent North Sea crude for delivery in August finished on the final day of the contract at $103.55, up $1.15 a barrel from Friday.
Matt Smith of Summit Energy said the euro's rise against the dollar helped prices gain. The euro added 0.24 percent from late Friday.
The Gulf incident came amid constant tensions between Iran and western powers over its alleged program to seek nuclear weapons and threats to shut down the Strait of Hormuz global oil shipping chokepoint.
US defense officials said the motorboat had ignored warnings not to approach the refueling ship USNS Rappahannock near the UAE port of Jebel Ali, and that sailors on board the American vessel feared it could pose a threat.
"The US crew repeatedly attempted to warn the vessel's operators to turn away from their deliberate approach," US officials said.
Earlier both Saudi Arabia and the United Arab Emirates opened oil pipelines which bypass the Strait of Hormuz.
The UAE and Saudi pipelines create optional transport routes for crude, alleviating concerns that Iran could disrupt supplies in negotiations with the West over its nuclear program, IG Markets said in a report.
"While the added ability to bypass the Straits of Hormuz enhances the security of Saudi Arabia and the UAE's exports, the cushion it provides for price risk in global oil markets is less clear," commented JPMorgan commodity analysts.
"Should Middle East Gulf shipping routes actually become seriously threatened, prices would quickly adjust to reflect the expected duration of the disruption and the potential for a mitigating release of OECD strategic reserves."