Oil Prices Rise as Iran Hit by Sanctions

Oil prices rose on Tuesday after the West slapped economic sanctions on major crude exporter Iran, helping to offset weak demand worries caused by the Eurozone sovereign debt crisis, analysts said.

New York's main contract, light sweet crude for delivery in January, climbed $1.43 to $98.35 a barrel.

Brent North Sea crude for January advanced $1.10 to $107.98.

"Geopolitical risks are giving buoyancy to oil prices," said Commerzbank analyst Carsten Fritsch.

Western powers on Monday imposed a new batch of sanctions targeting Iran's energy sector amid speculation of a possible Israeli military strike against Tehran.

"This affects not only the financial sector but also the country's oil industry, increasing the risk of supply bottlenecks," Fritsch said.

An angry Iran and its powerful ally Russia slammed the new sanctions imposed over Tehran's suspect nuclear program, insisting on Tuesday that they were illegal and futile.

The measures against Iran's financial, petrochemical and energy sectors announced Monday by the United States, Britain and Canada amounted to no more than "propaganda and psychological warfare," Iranian foreign ministry spokesman Ramin Mehmanparast said.

They were "reprehensible" and would prove ineffective, he said.

Russia -- which with China blocked any possibility of the Western steps going before the UN Security Council for approval -- said the sanctions were "unacceptable and against international law."

The United States and its allies cited a November 8 report by the U.N.'s International Atomic Energy Agency asserting "credible" evidence of Iranian nuclear weapons research as justification for the new sanctions.

Iran has dismissed the IAEA report as "baseless" and biased. It insists its nuclear program is for exclusively peaceful, civilian purposes.