Oil prices eased on Friday at the end of a volatile week as traders took their cue from the strong dollar and falling Wall Street shares, despite upbeat US data and simmering tensions over key producer Iran. In London late afternoon trade, Brent North Sea oil for delivery in February dropped 24 cents to $112.50 per barrel. New York\'s main contract, West Texas Intermediate (WTI) for delivery in February, shed 46 cents to $101.35 per barrel. The European single currency slumped to another 16-month dollar low on Friday, as upbeat US payrolls data contrasted sharply with dire economic numbers in the crisis-hit eurozone, dealers said. The US unemployment rate dropped to 8.5 percent in December, the lowest level in nearly three years, as hiring surged more than expected, official data showed on Friday. The economy added 200,000 nonfarm jobs last month, the Labor Department said. That was sharply higher than the average analyst estimate of 150,000. In reaction, the euro dived to $1.2698, which was last seen on September 13, 2010. It also sank to 97.91 yen, which was the lowest level since December 2000. The stronger greenback makes dollar-priced crude more expensive for buyers using weaker currencies, helping to dampen demand and prices. \"A firmer US dollar and an unexpected inventory build in the US resulted in profit-taking in the wake of the sharp price rises seen in recent days,\" said Commerzbank analyst Carsten Fritsch. Oil futures also sank on Thursday as US stockpiles unexpectedly rose, raising concerns about weak demand in the world\'s biggest oil-consuming nation. Official data showed that US crude reserves jumped 2.2 million barrels in the week ending December 30. However, crude oil prices remain supported by tensions in the Middle East between Western powers and major oil producer Iran over Tehran\'s alleged efforts to build a nuclear bomb. Earlier this week, oil had spiked close to eight-month highs on the back of heightened tensions between the West and Iran. Tehran will hold fresh military exercises in and around the strategic Strait of Hormuz within weeks, the naval commander of its powerful Revolutionary Guards was quoted as saying on Friday. The waterway is the world\'s \"most important chokepoint\" for oil tankers, according to the US Energy Information Administrations. Some 20 percent of the world\'s oil flows through the narrow channel at the entrance to the Gulf. Iran\'s regular navy completed 10 days of wargames to the east of the strait, in the Gulf of Oman, earlier this week with tests of three anti-ship missiles. The European Union is moving closer to imposing an Iran oil embargo and Tehran has warned the United States to remove its naval forces from the Gulf, threatening to disrupt shipping through the strategic Strait of Hormuz. \"Fresh fears of a military confrontation that would endanger the flow of crude through the Strait of Hormuz have rattled oil markets since the start of the year,\" Barclays Capital said in a market commentary. \"As Iran ratchets up its anti-Western rhetoric and military exercises, the West continues to tighten its stringent sanctions against the country.\" On Wednesday, New York\'s light sweet crude had spiked to $103.74 per barrel, a level previously reached on May 11. Brent oil meanwhile leapt on Thursday to $114.64, its highest point since November 14.