New York's main contract, West Texas Intermediate crude for delivery in May, finished the session at $103.64 a barrel, up 94 cents from Wednesday's closing level.
Iran is scheduled to meet Saturday in Istanbul with the United States, Russia, China, Britain, France and Germany, the first such talks since a similar meeting broke up inconclusively more than a year ago.
The oil market "has low expectations" for the meeting, said Andy Lipow at Lipow Oil Associates.
The so-called P5+1 powers suspect Iran's uranium enrichment program masks a drive to produce a nuclear weapon. Iran denies the charge, insisting its program is purely peaceful.
Iran's President Mahmoud Ahmadinejad on Thursday said that his country "will not retreat an iota" from its nuclear rights.
In London, Brent North Sea crude for May surged $1.53, settling at $121.71 a barrel.
The Iran tensions have supported oil prices for months, with some analysts estimating they have exacted a premium of $10-15 a barrel.
Adding to the bullish bias Thursday were public remarks by Federal Reserve vice chair Janet Yellen late Wednesday on the economic outlook.
The Fed official, echoing chairman Ben Bernanke, did not rule out fresh stimulus for the economy if conditions deteriorated. The Fed has maintained an ultra-loose monetary policy for three years.
Lipow predicted that a new Fed stimulus would drive oil futures "upward."
Meanwhile, the International Energy Agency (IEA) held steady its estimate for global crude-oil demand steady for the second straight month.
In other oil market developments, Royal Dutch Shell said it had found no sign of leaks at its energy production facilities in the Gulf of Mexico after an oil sheen was spotted in the area.
The sheen measures roughly 10 square miles (25.6 square kilometers).