Oil prices rose on Monday with Brent crude futures up near $111, extending gains from last week 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 the West 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 89 cents at $110.8 a barrel by 1025 GMT, after posting a weekly gain of more than 3%, its best since mid-October. Earlier Brent had pushed to an intraday high of $111.2 a barrel.
US crude was up 81 cents to $101.8 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 is considering a ban — already in place in the United States — on Iranian oil imports.
“Oil traders are pricing in a 20% chance of a military conflict with Iran, which could push prices above $200, so they're buying insurance now,” said Gordon Kwan, head of energy research at Mirae Asset Management in Hong Kong.