Oil prices rose modestly Monday after the EU slapped an embargo on Iran's crude exports as part of tough new sanctions aimed at stopping Tehran from funding its disputed nuclear program.
New York's main contract, West Texas Intermediate crude for March delivery gained $US1.25 to $US99.58 a barrel after the widely-expected embargo was announced.
In London Brent North Sea crude for March climbed 72 US cents to $US110.58 a barrel.
After weeks of talks, the European Union Monday agreed to ban oil imports from Iran as part of a concerted effort with the United States to pressure Tehran to halt its alleged nuclear arms program. Tehran denies seeking nuclear weapons.
The EU also froze the assets of the country's central bank "while ensuring that legitimate trade can continue under strict conditions."
The impact on the markets of the well-telegraphed sanctions was limited. While they set an immediate ban on new imports of oil from Iran, existing contracts would be phased through July 1, a move designed to limit the impact on country's like Greece, which has depended heavily on Iranian oil.
"The import ban ... will be implemented gradually over a period of several months, which should dampen its inflationary effect on the oil price," said Commerzbank analyst Carsten Fritsch.
Iran has been selling about one-fifth of its crude to EU nations, with Greece, Spain and Italy the top buyers.
"With a daily import volume of 450 thousand barrels and accounting for nearly 20 per cent of total Iranian oil exports, the EU is the second-largest customer of Iranian oil," Fritsch noted.
Andy Lipow of Lipow Oil Associates said: "The hope for the EU is that Iran will sell less of its own crude, impacting revenues".
"Meanwhile, European Union countries who where purchasing Iranian crude will need to find alternative sources," he said, pointing to Saudi Arabia, which has increased its production, and Kuwait.
