Oil prices jumped to a nine-month high of $105.26 a barrel in trading Monday after Iran said it halted crude exports to Britain and France in an escalation of a dispute over the Middle Eastern country's nuclear program.
By the end of the trading day on the New York Mercantile Exchange, crude futures settled up $1.68, to $104.92 a barrel.
"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."
Stock markets in the United States were closed Monday for the Washington's Birthday holiday.
Iran also is considering extending the embargo to other European countries, a semiofficial Iranian news agency reported Monday.
European Union sanctions, and other punitive measures imposed by the United States, are part of Western efforts to derail Iran's disputed nuclear program, which the West fears is aimed at developing atomic weapons. Iran denies the charges and says its program is for peaceful purposes.
Crude oil prices also rose on hopes that Greece's new bailout deal would be approved on Monday as well as by China's decision to boost money supply bid to spur lending and economic growth.
China's central bank said Saturday it will lower the ratio of funds that banks must hold as reserves, a move that frees tens of billions of dollars.
Oil has jumped from $96 earlier this month amid optimism the global economy may grow more this year than previously expected.
"Building economic momentum has the potential to pull oil prices higher for the next 12 to 24 months," J.P. Morgan said in a report.