Oil prices jumped to a nine-month high above $105 a barrel Monday after Iran said it halted crude exports to Britain and France in an escalation of a dispute over the Persian Gulf country's nuclear program.
By Monday afternoon, benchmark March crude was up $2.02 to $105.26 per barrel in electronic trading on the New York Mercantile Exchange, the highest since May. The contract had risen 93 cents Friday to settle at $103.24 per barrel in New York.
Iran's announcement will likely have minimal impact on supplies, analysts said, because only about 3 percent of France's oil consumption is from Iranian sources. Britain had not imported oil from the Islamic republic in six months.
"The price rise is more a reflection of concerns about the further escalation in tensions between Iran and the West," said commodity analyst Caroline Bain of the Economist Intelligence Unit. "Banning the tiny quantities of exports to the U.K. and France involves very little risk for Iran -- indeed quite the opposite, it catches the headlines and leads to a higher global oil price, which is something Iran is very keen to encourage."
Markets in the United States were closed Monday for the Presidents Day holiday. But gas prices have been creeping up steadily. In the Buffalo Niagara region, the average price for a gallon of regular Monday was $3.84, up seven cents from a week ago and up 20 cents from a month ago. The local price has climbed 50 cents from a year ago.
Iran's oil ministry said Sunday 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 include a freeze of Iran's central bank assets and an oil embargo set to begin in July.