Oil prices rose and surpassed 100 dollars a barrel on Tuesday as better-than-expected economic data spurred optimism of increased demand and geopolitical worry surrounding Iran raised concern about supply.

The Institute for Supply Management said on Tuesday that its manufacturing index for Dec. rose to a six-month high of 53.9 from 52.7 in November. Readings above 50 indicate an expansion.

Also supporting the oil price, China's Purchasing Managers' Index for Dec. stood at 48.7, compared to a 47.7 reading for November.

On Tuesday, Iranian officials were quoted as saying they'd take action if U.S. naval ships returned to the Persian Gulf. Analysts worried that the situation may disrupt energy supplies.

Light, sweet crude for Feb. delivery rose 4.13 dollars, or 4.2 percent to settle at 102.96 dollars a barrel on the New York Mercantile Exchange.

In London, Brent crude for Feb. delivery also rose and last traded around 111.25 dollars a barrel, up 3.6 percent.