U.S. crude for August traded up $1.29 to $68.79 a barrel by 1:57 p.m. EDT (1767 GMT). London Brent crude rose $1.44 to $68.42 a barrel.

The U.S. dollar fell against the euro on speculation the Federal Reserve may lower expectations of an interest rate rise when it concludes its meeting on Wednesday.

The dollar's losses supported commodities denominated in the greenback, pushing up the benchmark Reuters-Jefferies CRB Index of 19 commodity futures.

"The weaker dollar is supportive and you have the supply disruptions in Nigeria and the turmoil in Iran," said Joseph Arsenio, managing director at Arsenio Capital Management in Larkspur, California.

Italian oil company ENI declared force majeure on shipments of Brass River crude oil from Nigeria.

Persistent militant attacks over the past three years have cut oil output in the OPEC member, the world's eighth biggest crude oil exporter, to less than two thirds of its installed capacity of 3 million barrels per day (bpd).

Royal Dutch Shell said it was still checking its oil operations in Nigeria's Niger Delta after militants claimed they had launched three attacks against its facilities at the weekend.

Nigerian security forces arrested nine gunmen suspected to be involved in last week's pipeline attack that forced Agip to halt some oil output in the Niger Delta.

Economic optimism has helped lift crude prices from below $40 a barrel in February to above $70 earlier this month.

The chief economist for the International Energy Agency warned that any strong price rise could clip a rebound in the global economy.

Kuwait's oil ministers said OPEC will not cut oil output at its meeting in September, after the producer group last year agreed to a series of output cuts to help lift prices.

"Nobody expected the price to reach $70 a barrel so quickly," Kuwait's Oil Minister Sheikh Ahmad al-Abdullah al-Sabah told reporters at parliament, adding OPEC would likely call for greater compliance with current output targets.

"It was forecast by the fourth quarter. So it slipped a bit but still, if we achieve $75-$80 by the end of the year, that would be fine."

OPEC's president has previously said the cartel wants an oil price of $75 a barrel by the end of the year.

Iranian authorities said they would teach an exemplary lesson to "rioters" held in the worst unrest since the birth of the Islamic Republic and accused Western powers of inciting the violence.

U.S. President Barack Obama strongly condemned the OPEC country's crackdown on the anti-government protesters, who have taken to the streets following disputed elections earlier this month.

A revised Reuters poll of analysts ahead of U.S. inventory data forecast crude stocks in the world's top consumer fell by 1.0 million barrels last week on lower imports, while gasoline and distillates stocks were seen rising.

U.S. inventory data from the American Petroleum Institute will be released later on Tuesday, with U.S. Energy Information Administration data due out on Wednesday.