Oil rose today as the European Union announced a phased-in embargo of Iranian crude in an effort to contain Tehran's nuclear programme.
The ban will be implemented in stages by July 1st.
The EU bought 450,000 barrels a day of Iran's oil in the first half of 2011, US Energy Department data show.
"It remains to be seen how the embargo will be implemented and therefore how prices will react," said Christopher Bellew, a senior broker at Jefferies Bache in London. "Sanctions would of course be more effective if the EU can persuade other buyers to join them. And full implementation has been delayed to July 1st. A lot can happen in five months."
Brent oil for March settlement gained as much as $1.33, or 1.2 per cent, to $111.19 a barrel and was at $111.80 a barrel at 1.37pm on the ICE Futures Europe exchange in London.
On the New York Mercantile Exchange, West Texas Intermediate crude for March delivery was at $98.85 a barrel after rising as much as 1.2 per cent to $99.50. Brent's premium to WTI widened for a second day, to $11.85.
"As of July 1st, we have a ban on the import of oil and oil products from Iran," the Dutch foreign minister said, adding that ministers will see how to "limit the damage" to Greece from the measure.
"The solution for Greece could be a gesture from other oil-exporting countries to be accommodative on the price of oil supplied to Greece," Mr Rosenthal said. "Of course, it could also be the case that within the European Union, among member states, we could have a form of compensation, but those are matters that aren't at hand now and which have to be solved before July 1st."
Mediterranean countries that import much of their crude from Iran, such as Greece, Spain and Italy, had argued for sanctions to be phased in over as much as a year. The three nations accounted for about 68 per cent of EU imports from Iran in 2010, European Commission data show.
Saudi Arabia has unused daily production of about 2.2 million barrels a day that can be deployed to compensate, the International Energy Agency says. The Centre for Global Energy Studies, a consultancy founded by former Saudi oil minister Sheikh Ahmad Zaki Yamani, and Washington-based consultant PFC Energy estimate it may be as high as 2.5 million.
Bloomberg
