Oil Prices Spike on Iran Export Warning to EU

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World oil prices spiked on Wednesday after Iran warned that it may suspend crude exports to six European Union countries amid escalating tensions over Tehran's nuclear program.

New York's main contract, West Texas Intermediate (WTI) light sweet crude for delivery in March, climbed $1.06 to close at $101.80 a barrel.

In London, Brent North Sea crude for April delivery settled at $118.93 a barrel, up $1.58 from Tuesday's closing level.

The market was mainly fixated on concerns about Iran, Tom Bentzat BNP Paribas said.

"This morning, we had this news about Iran cutting exports to (six) European countries. It seems to be the primary driver of the market," he said.

Iran said Wednesday that it was considering cutting oil sales to six EU countries but would not do so "at the moment," while unperturbed European officials said they were looking for other suppliers anyway.

State broadcaster IRIB reported on its website that the ambassadors of France, Greece, Italy, the Netherlands, Portugal and Spain were called to the foreign ministry in Tehran and warned that "Iran will revise its oil sale to these countries."

The warning was in retaliation of a European Union ban on Iranian oil imports that is being phased in as existing contracts expire up to July 1. The EU, the United States and their allies suspect Tehran is developing nuclear weapons; Tehran insists its program is purely for peaceful purposes.

The European Commission said that, even if Iran did cut its sales to the European Union, it would make little difference as EU buyers were already switching suppliers.

Prices also won some support after the U.S. Department of Energy reported American crude stockpiles sank by 200,000 barrels in the week ending February 10, indicating strengthening demand in the world's biggest crude consumer.

Market expectations had been for a surge of 1.3 million barrels, according to analysts polled by Dow Jones Newswires.