LONDON -- An escalation in Middle East tensions helped send crude oil futures on both sides of the Atlantic to record highs Thursday.

Reports of pipeline explosions in Nigeria also boosted an oil market beset by geopolitical jitters.

At 1045 GMT, the front-month August Brent contract on London's ICE Futures exchange was $1.16 higher at $75.55 a barrel and just shy of the record $75.60/bbl reached earlier Thursday.

The August contract expires Friday and the more actively traded September contract was $1 higher at $75.96/bbl.

The front month August crude contract on the New York Mercantile Exchange was trading 81 cents higher at $75.76/bbl and just off its record high of $75.89/bbl.

The ICE's gasoil contract for August delivery was up $19.25 at $655.50 a metric ton, while Nymex gasoline for August delivery was up 1.92 cents at $2.2727 a gallon.

An increase in geopolitical tensions, most notably in the Middle East, has underpinned crude oil's latest record run.

Earlier Israel said that it was imposing an air, sea and land blockade on Lebanon as its fighter-bombers carried out their biggest offensive in Lebanon since Israel's 1982 invasion.

Air forces carried out rocket strikes on the country's only international airport and on the Hezbollah television station.

The attack was in retaliation to a Hezbollah attack in which eight Israeli soldiers were killed and two others captured.

While latest developments don't directly threaten security of the Middle East oil supply, growing instability in region is keeping a risk premium firmly on prices. Fears are growing that the violence will drag in other surrounding oil producing countries.

"The market is already jittery about geopolitics and the escalation of tensions in the Mid East only serves to increase nerves," said one oil broker based in London.

Reports that twin blasts hit oil installations owned by Italy's Agip in the Niger Delta, also unsettled the oil market.

Agip's parent company Eni ruled out sabotage saying the loss of oil from the pipeline was "irrelevant".

Nonetheless, the latest supply snag comes at a time when Nigeria's daily oil production has been severely reduced due to ongoing violence in the region.

Meanwhile, Iran's nuclear defiance continues to underpin the crude oil market.

Iran this week said it needed more time to consider a package of incentives from the six negotiating nations in return for its halting uranium enrichment.

The move prompted the six -- the U.S., France, the U.K., China, Russia and Germany -- to agree Wednesday to send Iran back to the U.N. Security Council for possible punishment.

"For the oil trade that means the ultimate disruption -- no Iranian oil supply -- and other lesser problems are looking more likely. Add in tightening U.S. gasoline inventories, suggesting U.S. demand remains strong, and you have a recipe for higher prices," said Tobin Gorey, commodity strategist at Commonwealth Bank of Australia.

Further bolstering the case for owning crude futures is Wednesday's weekly stocks report from the U.S. Department of Energy.

The DOE statistics showed a massive 6 million barrel drawdown in crude stocks, well in excess of market expectations. U.S. gasoline demand stayed strong in the week including the July 4 holiday, at 9.621 million b/d, off just 24,000 b/d from a week earlier, which was the second-highest level on record.

"The data yet again confirms that high gasoline prices are still having little effect on demand," said analysts at Sucden Commodity brokers.

---By Tim Falconer, Dow Jones Newswires; +44 (0) 207-842- 9449; [email protected]