Oil prices jumped to nearly 105 dollars a barrel - a nine-month high - in Asia today, after Iran said it halted crude exports to Britain and France in a dispute over its nuclear programme.
Benchmark crude was up 1.75 to 104.99 dollars a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. Earlier in the day it rose to 105.21, the highest since May. The contract rose 93 cents to settle at 103.24 a barrel in New York on Friday.
Brent crude was up 1.52 at 121.10 dollars a barrel in London.
Iran's oil ministry said yesterday it stopped crude shipments to British and French companies in an apparent pre-emptive blow against the European Union after the bloc imposed sanctions on Iran's crucial fuel exports. They included a freeze of the country's central bank assets and an oil embargo set to begin in July.
Iran's oil minister Rostam Qassemi had warned earlier this month that Tehran could cut off oil exports to “hostile” European nations. The 27-nation EU accounts for about 18% of Iran's oil exports.
The EU sanctions along with other punitive measures imposed by the US are part of Western efforts to derail Iran's disputed nuclear program, which the West fears is aimed at developing atomic weapons. Iran denies the charges, and says its programme is for peaceful purposes.
Oil prices were also boosted by China's decision to boost money supply in a bid to spur lending and economic growth. China's central bank said on Saturday it would lower the ratio of funds that banks must hold as reserves, a move that frees tens of billions of dollars.
Oil has jumped from 96 dollars earlier this month amid optimism the global economy may grow more this year than previously expected. JP Morgan raised its Brent crude price forecast to as high as 135 from 120 dollars.
“Building economic momentum has the potential to pull oil prices higher for the next 12 to 24 months,” JP Morgan said in a report.
In other energy trading, heating oil added 0.6 cents to 3.22 dollars a gallon and petrol futures rose 1.4 cents to 3.22 dollars a gallon. Natural gas jumped 9.2 cents to 2.66 dollars per 1,000 cubic feet.