This week New York's WTI premium crude began to trend gently downwards from last Thursday's peak of $US66.10, to close at $US64.40 yesterday.

But in Singapore, prices kept rising, reaching $US74.42 yesterday, higher even than last Friday's close of $US73.29.

Prices surged last week after Iran captured 15 British sailors and marines for allegedly entering Iranian waters.

Then on the weekend, a British oil worker was kidnapped from Nigeria’s southern oil-producing region, followed by the abduction of Lebanese workers in the area on Monday.

Nearly 70 foreigners have been taken hostage since the start of the year in the Niger River delta region, with most released unharmed in exchange for a cash payment. A Dutch construction worker and two Chinese people remain in captivity.

Rebels last year succeeded in slicing Nigeria’s daily crude oil output by more than a quarter, by severing pipelines and threatening foreign oil workers.

Africa’s premier oil-producing nation is holding elections next month, which could cause more political turbulence.

Meanwhile in Iran, the country’s chief international negotiator called for an end to “the language of force” in the dispute over the British crew who have been held hostage for two weeks and said there was no need to put them on trial.

News that Tehran will now “pardon” the captives and release them as a “gift” to Britain will see oil prices ease, but the incident has underlined the volatility and recklessness of the Iranian Government.

Traders also continue to watch developments over Iran’s failure to comply with demands to halt its uranium enrichment program, which is helping to keep oil prices elevated.