New York, Jul 4 (IANS): Crude oil prices rose Tuesday as rising Iran tension caused supply fears, Xinhua reported.

Iran has again threatened to block a critical shipping route in response to a European embargo of Iranian oil.

Iranian lawmakers Monday drafted a bill calling for Iran to stop oil tankers heading to western countries from passing the Strait of Hormuz.

The Strait of Hormuz, under control of Iran, is an important oil route from the Middle East, carrying about one fifth of global oil output to the rest of the world.

Light, sweet crude for August delivery soared by $3.91, or 4.67 percent, to settle at $87.66 a barrel on the New York Mercantile Exchange.

In London, Brent crude for August delivery also surged and returned above $100 a barrel for the first time since June 1.

The EU embargo took full effect Sunday after the latest talks over Iran's disputed nuclear programme between Tehran and six world powers ended with no positive results.

Supply fears worsened after Iran Tuesday claimed it had successfully tested missiles capable of hitting Israel in response to threats of military action against it.

The US crude market will be closed Wednesday due to the Independence Day holiday.