Crude oil opened 0.2 percent higher on Monday versus Friday’s New York close of $101.08.
After opening the new trading week in Asia at $101.28, crude prices edged up to as high as $101.89 in European trading to extend last week’s gains due to tension in Iran. The unrest in the country raises the risk of disruption to crude shipments by the world’s fifth-largest oil exporter.
Over the weekend, Iran issued a warning to Western countries that any introduction of sanctions against Iran to block its oil exports would result in a significant increase in oil price since the market is already tight.
The cause of the tensions between the West and Iran was the storming of the British Embassy in Tehran last week. The West has been accusing Iran of working on a nuclear bomb. Iran says it is enriching uranium for peaceful purposes.
Meanwhile the unrest in Syria has resulted on the European Union imposing sanctions. Huge oil company Royal Dutch Shell shutting down its activities there. Prior to the sanctions Syria was exporting about 400,000 barrels per day at the start of the year and it is probably exporting none at the moment.
The oil market is also focusing developments in the euro zone where there will be critical meeting this week at the EU Summit in Brussels as European leaders work towards a rescue plan to be unveiled at a the summit.
Meanwhile, German Chancellor Angela Merkel and French President Nicolas Sarkozy are meeting in Paris today to try to come up with a proposal to on fiscal union to centralising control of euro zone budgets.
The outcome of the Brussels Summit will have a big impact on oil prices.