US President Barack Obama and Israeli Prime Minister Benjamin Netanyahu were scheduled to meet to discuss the issue. Obama said the US and Israel agree diplomacy is the best way to resolve the crisis but that the US will consider all options.

Oil prices topped $107 per barrel in New York before falling back in afternoon trading. The US, Europe and other nations fear that Iran may be building a nuclear weapon. Iran, the world's third-largest oil exporter, denies the charge.

Oil trader Stephen Schork said the current price of oil reflects investors' fear of military conflict. Analysts expect prices to continue to climb, but there are indications some investors may sell high oil prices appear to slow economic growth in some countries.

Prices also were affected by a temporary closure of a Midwest pipeline and a forecast for slower economic growth from China.

China's premier, Wen Jiabao, lowered the country's growth target to 7.5 percent from the 8 percent it has stood at for years and disclosed plans to boost domestic consumption and maintain a "prudent" monetary policy.

Benchmark crude fell 25 cents to $106.47 per barrel in afternoon trading on the New York Mercantile Exchange after earlier hitting $107.42 per barrel. The price has been $106 per barrel or higher since Feb. 21.

Brent crude rose 61 cents to $124.26 per barrel in London.

Enbridge Inc. has closed a 751-kilometer oil pipeline that carries a nominal capacity of 317,000 barrels per day from Wisconsin to Indiana because of an accident. A company spokesman said that a portion of the line is expected to reopen Wednesday evening and the rest should be open by Thursday.

In other energy trading, natural gas fell 12 cents, or 4.7 percent, to $2.48 per 1,000 cubic feet, weighed down by weak demand during the mild winter. Heating oil rose 2.13 cents to $3.2232 per gallon and gasoline futures fell 0.22 cent to $3.2699 per gallon.