NEW YORK ? Oil prices climbed nearly 2 percent Tuesday after Iran again threatened to cut off supplies to Europe.
Iranian lawmakers are pushing a plan to halt crude exports crude to Europe before the European Union begins an oil embargo this summer. The EU embargo is part of a broader strategy by Western nations to pressure Iran to abandon a nuclear program that the U.S. and other nations believe is developing weapons.
Iran, the world's third-largest oil exporter. 18 percent of its crude goes to the European Union. When the embargo takes effect in August, experts predict Iran will make up for the lost business by selling more oil to China and India. European nations say they need time to find new suppliers.
Iran is trying to speed up the process and force the EU to replace its oil sooner than expected.
"Iran will make the sanctions ineffective as it did in the past, and it will continue selling oil," Iranian Vice President, Mohammad Reza Rahimi, said in a statement reported Tuesday by the official IRNA news agency.
On Monday President Barack Obama announced sanctions on Iran's central bank that will make it harder for Iran to sell its oil to other countries.
On Tuesday benchmark U.S. crude rose by $1.56 to $98.47 per barrel in New York. Brent crude, used to price foreign oil varieties, rose by $1.14 to $117.07 per barrel in London.
U.S. oil prices had been on the decline over the past several trading days as supplies grew at the important Midwest distribution hub in Cushing, Okla. The possibility of Iran stopping crude sales to Europe, and creating tighter supplies, boosted prices around the globe.
"There's some panic buying going on today because there's concerns that Iran really is going to cut off the oil," PFGBest analyst Phil Flynn said.
Encouraging economic news in the U.S. also helped push oil prices and the stock market higher. The government said that the number of available jobs jumped to a three-year high in December, another sign that the economy continues to recover. Stocks bounced off earlier lows following the report, and the major indexes were in positive territory during afternoon trading.
Retail gasoline prices were flat on Tuesday at a national average of $3.48 per gallon, according to AAA, Wright Express and Oil Price Information Service. Prices remain at the highest levels ever for this time of year. A gallon of regular is 11 cents higher than it was a month ago and 36 cents higher than a year ago.
In other energy trading, heating oil rose 4 cents to $3.21 per gallon and gasoline futures rose by 2 cents to $2.95 per gallon. Natural gas futures fell by 8 cents to $2.47 per 1,000 cubic feet.
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