Oil prices rose slightly Wednesday, reversing earlier losses, as the US government reported mixed energy inventory data and the market tracked Iran's ongoing political crisis.

New York's main futures contract, light sweet crude for delivery in August, gained 20 cents to 69.44 dollars a barrel.

The price of London's Brent North Sea crude for August delivery gained 19 cents to 68.99 dollars a barrel.

The US Department of Energy on Wednesday said that its crude stockpiles dropped 3.8 million barrels in the week ending June 19. Analysts' consensus forecast had been for a fall of 1.3 million barrels, according to Dow Jones Newswires.

Inventories of gasoline, or petrol, jumped by 3.9 million barrels compared to expectations of a climb totalling one million barrels.

"The numbers virtually cancel each other out," said Sucden analyst Robert Montefusco, pointing to the fact that in nominal terms the fall in crude inventories virtually matched the increase in gasoline stockpiles.

In Tehran meanwhile, Iran's supreme leader on Wednesday warned that the regime would not back down in the face of opposition protests over the disputed presidential vote, amid soaring tensions between the Islamic republic and the West.

"In the recent incidents concerning the election, I have been insisting on the implementation of the law and I will be (insisting). Neither the system, nor the people will back down under force," Ayatollah Ali Khamenei said.

It was the latest indication that the clerical regime will not brook dissent over the re-election of President Mahmoud Ahmadinejad despite a wave of public demonstrations and complaints that the June 12 vote was rigged.

Analysts are concerned that a worsening of the crisis could cause the Iranian government to cut off oil supplies or block the Strait of Hormuz -- a vital passageway for oil tankers.

Iran produces about 3.8 million barrels of oil per day and is the third biggest global crude exporter after Russia and Saudi Arabia.

Elsewhere on Wednesday, Italian oil giant Eni said crude oil deliveries from Nigeria face some interruption after an attack on a pipeline to a major export terminal there.

Market attention was also on the outcome of a US Federal Open Market Committee meeting on interest rates, ending later on Wednesday, and the effect it would have on the dollar.

A weaker US currency makes dollar-priced oil cheaper for buyers holding stronger currencies, which tends to boost demand and lift prices.

Crude oil futures plunged from record high points of more than 147 dollars in July 2008 to about 32 dollars in December as the economic downturn ravaged energy demand but the market has since clawed back ground on recovery hopes.