Oil stayed within sight of $120 a barrel on Tuesday as world consumers grappled with supply disruptions ranging from Iran to Sudan to the North Sea.

Oil also rose briefly after Europe's much-awaited bailout of Greece. But while the deal resolves Athens' immediate financing needs, it is unlikely to revive its shattered economy.

Light profit-taking sent Benchmark Brent to $119.51, down 54 cents, after closing above $120 on Monday for the first time since June 15.

US crude was at $104.50, up $1.26, after touching $105.44 on Monday, its highest since May 5.

The loss of some global supply, a recovering US economy and China's easing policy to support growth have lifted oil and stoked investor appetite for riskier assets.

Oil's rally is unlikely to lose steam as Western sanctions bite into supply from Iran, OPEC's second-largest producer. The European Union enraged Tehran last month when it agreed to slap a ban on Iran's oil from July 1.

On Sunday, Iran announced a retaliatory halt in oil sales to French and British companies, a largely symbolic step as oil sales to the two countries were already greatly reduced.

"Sabre-rattling on the part of Iran is continuing to lend support to the price... which 'punishes' all EU countries for their boycott decision," said Carsten Fritsch of Commerzbank. The euro oil price is just below its mid-2008 record high, he said.

Iran kept up the pressure on Tuesday, saying it would take pre-emptive action against its enemies if it felt its national interests were endangered.

"Our strategy now is that if we feel our enemies want to endanger Iran's national interests, and want to decide to do that, we will act without waiting for their actions," Mohammad Hejazi, the deputy head of the Islamic Republic's armed forces, told Fars news agency.

Tehran's biggest oil customers have meanwhile made voluntary cutbacks ahead of Europe and Washington's tighter sanctions that aim to starve Iran of oil revenue to support its controversial nuclear programme.

Top buyer China will import less oil from Iran this year, while European companies are also cutting purchases ahead of a July 1 EU embargo.

And Iran's third-largest customer Japan is likely to reduce imports from Tehran to win waivers from US sanctions. - Reuters