Oil prices jumped back above $120 a barrel Thursday, rising for the first time in four days after Kurdish rebels reportedly admitted causing a fire at an oil pipeline in Turkey.

Light, sweet crude for September delivery advanced $1.64 to $120.20 a barrel on the New York Mercantile Exchange, after earlier rising as high as $121.78. Prices fell to $118.58 on Wednesday.

Pro-Kurdish news agency Firat said Kurdish rebels have claimed responsibility for fire on a Turkish section of the Baku-Tbilisi-Ceyhan pipeline. The fire, which was still burning Thursday, forced workers to shut down two valves along the pipeline as a precaution, halting the flow of all oil being sent to Ceyhan terminal from the east. But officials said shipments were not affected.

Still, the report raised the possibility of a long shutdown of the U.S.-backed 1,100-mile pipeline, which can pump slightly more than 1 million barrels of crude oil per day, or more than 1 percent of the world’s daily crude output.

“If it’s down for a month, that would delay shipment of as much as 30 million barrels of juice, which is a huge chunk even amid this demand destruction we’re seeing,” said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates in Galena, Ill.

The market was also eyeing more tension over Iran’s nuclear program. The five permanent U.N. Security Council members and Germany agreed Wednesday to pursue new sanctions against Iran, which will probably take months to implement.

Tehran has refused to curb its uranium enrichment and may be trying to run out the clock on the Bush administration in hopes of getting a better offer from a new U.S. president next year, the State Department said.

Iran says it isn’t seeking nuclear weapons and won’t scale back what it calls a legitimate energy-production program.

Before the rebound, Nymex front-month crude futures had fallen around 20 percent, or about $30, since reaching a record high of $147.27 on July 11.

The U.S. Energy Department’s Energy Information Administration said Wednesday that crude supplies rose 1.7 million barrels in the week ended Aug. 1, slightly more than the 1.2 million-barrel increase expected by analysts surveyed by energy research firm Platts.

The EIA said inventories of distillate fuel, which include diesel and heating oil, jumped 2.8 million barrels. The analysts had expected an increase of 2.3 million barrels.

Meanwhile, EIA data showed gasoline stockpiles fell 4.4 million barrels last week, much more than the 1.4 million drop expected by analysts. The big drop in gasoline stocks surprised some oil market traders, but analysts said it likely signals that gas distributors have taken more deliveries from refiners as the summer driving season enters its last month _ not that motorists are suddenly driving more in response to recent pullbacks in pump prices.

In other Nymex trading, heating oil futures rose 1.86 cents to $3.2565 a gallon, while gasoline prices gained 5.57 cents to $3.005 a gallon. Natural gas futures rose by 1.1 cents to $8.78 per 1,000 cubic feet.

In London, September Brent crude added $1.45 to $118.51 a barrel.

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Associated Press Writers George Jahn in Vienna, Austria and Alex Kennedy in Singapore contributed to this report.