Forexpros – Crude oil futures advanced to a two-week high on Monday, boosted by fears over a disruption to Iranian supplies and fresh hopes that European policymakers will increase efforts to tackle the region’s debt crisis.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in January traded at USD101.66 a barrel during European morning trade, gaining 0.69%.
It earlier rose by as much as 0.75% to trade at USD101.72 a barrel, the highest since November 17.
Crude prices continued to draw support from mounting geopolitical tensions over Iran after the U.S., the U.K. and the European Union tightened their sanctions against the country last week.
Iran’s Foreign Ministry said on Sunday that global oil prices would more than double if the West seriously considered blocking Tehran’s ability to export oil.
“As soon as such an issue is raised seriously the oil price would soar to above USD250 a barrel,” Foreign Ministry spokesman Ramin Mehmanparast said.
Also adding to fears, Iranian media reported on Sunday that the country’s military had shot down a U.S. drone, although a U.S. official said there was no indication the aircraft had been hit.
Iran is the world’s fourth largest oil producer and the second biggest exporter among the Organization of the Petroleum Exporting Countries.
Meanwhile, market sentiment strengthened after Italy unveiled a EUR30 billion package of austerity measures on Sunday aimed at reducing the country’s debt load.
Later Monday, German Chancellor Angela Merkel and French President Nicolas Sarkozy were to meet in Paris in order to outline proposals for stricter enforcement of the region’s budget discipline, ahead of Friday’s critical European Union summit.
The U.S. dollar weakened against most of its major counterparts, with the dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, retreating 0.3% to trade at 78.51.
Oil prices typically strengthen when the U.S. currency weakens as the dollar-priced commodity becomes cheaper for holders of other currencies.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for January delivery climbed 1% to trade at USD111.03 a barrel, with the spread between the Brent and crude contracts standing at USD9.37 a barrel.
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