London: Oil prices rose on Monday with Brent crude futures up over $111, extending last week’s gains as rising tensions between Iran and the West increased the risk of disruption to crude shipments by the world’s fifth largest oil exporter.
Iran warned on Sunday that any move to block its oil exports would more than double crude prices with devastating consequences for a fragile global economy.
Brent crude was up $1.30 at $111.24 a barrel, after last week posting a gain of more than 3%, its best weekly gain since mid-October. Earlier, Brent had pushed to an intraday high of $111.62 a barrel. US crude was up $1.06 to $102.02 a barrel, having posted a gain of 4.3% last week.
Christopher Bellew, an oil trader with Jefferies Bache in London, said that worries about Iran and Syria were helping to buoy oil prices. “If Iranian exports were suspended that would be very significant as the market is tight already,” he said.
The European Union (EU) is considering a ban—already in place in the US—on Iranian oil imports. The storming of the British embassy in Tehran last week has opened the door for tougher action against Iran which is thought to be working on a nuclear bomb.
“The risk of disruptions to oil supplies remains high,” said Christophe Barret, global oil analyst at Credit Agricole CIB.
But on Friday, US defence secretary Leon Panetta made one of his most extensive arguments to date against any imminent military action against Iran over its nuclear programme, saying he was convinced sanctions and diplomatic pressure were working. Israel has called a nuclear-armed Iran a threat. Iran says it is enriching uranium for peaceful purposes.