Brent crude hit an eight-month high in Asian trade Monday after Iran halted its limited oil sales to France and Britain in what analysts said was a game of “political brinkmanship”.
Brent North Sea crude for April delivery gained $1.52 to $121.10 in morning trade. New York's main contract, West Texas Intermediate light sweet crude for March delivery, rose $1.70 to $104.94 per barrel.
“Oil starts the week on an eight-month high as Iran continues its political brinkmanship,” said Justin Harper, head of research at IG Markets Singapore.
Iran's oil ministry on Sunday announced that it was halting its limited oil sales to France and Britain in retaliation for a phased European Union ban on its oil, which has yet to take full effect.
The decision is not expected to have a big impact as France last year bought only three percent of its oil - 58,000 barrels per day - from Tehran, while Britain is believed to no longer be importing Iranian oil.
But it is seen as a warning shot to other EU nations that are largely dependent on crude imports from the Islamic republic, including Italy, Spain and Greece.
The EU ban on Iranian oil imports is part of a raft of economic sanctions designed to halt Tehran's nuclear programme, which the West fears masks a drive for atomic weapons.
Iran, which insists that its nuclear programme is for peaceful energy purposes, has been threatening for weeks to cut all oil exports to Europe because of the EU ban, but has thus far held off.
Ceasing all exports to the EU would harm its own economy unless it had Asian buyers ready to pick up the contracts.
“While targeting European countries... there is speculation Iran can't find enough buyers of its oil once the EU embargo kicks in,” Harper said.
“This could mean slowing down production from the world's fourth-biggest oil producer.”
Iran pumps 3.5 million barrels per day, of which it exports 2.5 million barrels. - Sapa-AFP