NEW YORK — Oil prices on Tuesday climbed to the highest level since May on concerns about Europe’s oil supplies.
Iran announced over the weekend that it will stop selling oil to Britain and France in retaliation for a planned European oil embargo this summer. The move was mainly symbolic — Britain and France import almost no oil from Iran — but it raised concerns that Iran could take the same hard line with other European nations that use more Iranian crude.
The European Union buys about 18 percent of Iran’s oil exports, though most of that comes from sales to just two countries: Italy and Spain.
Benchmark crude rose by $1.60 to $105.20 per barrel in New York. That’s the highest price for oil since May 11. Brent crude, which is used to price foreign oil varieties imported by U.S. refineries, rose by 55 cents to $120.60 in London.
“People are just scared about Iran,” independent analyst and trader Stephen Schork said. “It was a big head fake, but crude prices are still ripping” higher.
The announcement by Iran follows a several-month standoff with the U.S. and Europe over Iran’s nuclear program. Western nations fear Iran is building a nuclear weapon and have been trying to put financial pressure on the country to abandon its nuclear program.
The European Union has frozen assets of Iran’s central bank, and it plans to stop buying Iranian oil after July. If Iran stops selling oil to some European countries ahead of the embargo, refineries will have to find alternative sources of oil sooner than planned.
A scramble for alternate oil sources would temporarily boost oil demand and prices, analysts said.
“We have every reason to expect to see prices advance on this latest Iranian news,” Cameron Hanover analyst Peter Beutel said.
On Tuesday, oil prices also were supported by Europe’s approval of a $170 billion lifeline to Greece. The decision, which includes an agreement by Greece to cut spending, raised hopes that Europe will contain a banking crisis that has hurt its economy and weakened energy demand.
U.S. retail gasoline prices rose less than a penny Monday to a national average of $3.57 per gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular is 19 cents higher than it was a month ago and 40 cents more than a year ago.
Experts predict gasoline prices could hit a record of $4.25 per gallon by late April.
In other energy trading, heating oil rose 3 cents to $3.22 per gallon and gasoline futures rose 4 cents to $3.06 per gallon. Natural gas futures fell by 7 cents to $2.62 per 1,000 cubic feet.
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