A general view of the Hellenic Petroleum refineries is seen at Aspropyrgos town, west of Athens (Photo: AP)
Oil eased in volatile trading towards $123 a barrel on Tuesday as concerns over global economic growth trumped the supply risks and tension associated with Iran's controversial nuclear work.
Brent crude fell 66 cents to $123.12 a barrel by 1009 GMT after climbing to a daily high of $124.39. U.S. crude slid 62 cents to $106.09.
"On the one hand, the market is trading already on the expensive side. Given mixed economic data, the upside potential for prices from here should be limited," said Tobias Merath, head of Global Commodity Research at Credit Suisse Private Banking.
"At the same time, geopolitical risks are a growing concern, preventing prices from easing. Overall, we think price risks are slightly skewed to the upside due to strong technical momentum and a positive trend."
Israel's increasingly strident stance towards Iran over its nuclear program is keeping oil markets on edge.
Israeli Prime Minister Benjamin Netanyahu showed no sign of backing away from possible military action against the OPEC member after a meeting with U.S. President Barack Obama on Monday.
The International Atomic Energy Agency (IAEA) raised the alarm over Iran's nuclear work on Monday, saying there were indications of activities at Parchin, an Iranian military site its inspectors want to visit.
Tehran said on Tuesday it would give the U.N. nuclear watchdog access to Parchin. It did not give a date for such a visit.
Investors are also watching out for China's industrial output, investment and retail sales data due on Friday to see how the world's second-largest economy is weathering the global downturn.
Beijing cut its 2012 economic growth target to an eight-year low of 7.5 per cent from its long-standing annual goal of 8 per cent, raising the specter of slower oil consumption.
Evidence of sluggish demand in top consumer the United States could emerge later on Tuesday. U.S. crude oil stockpiles have risen for three straight weeks. The weekly report from the American Petroleum Institute is due later on Tuesday.