Oil prices rose for the first time in four days after the European Union on Monday banned oil imports from Iran, increasing fears that Middle East tensions could raise supply chain costs in the short-term and suppress global economic growth in the long-term.
Oil prices rose as much as 1.3 percent to $99.59 a barrel Monday morning on the New York Mercantile Exchange. Diesel prices across the U.S. rose for the second week in a row in the week ending Jan. 16, climbing 2.6 cents to $3.854 a gallon.
The EU said it would block Iran oil shipments starting next July 1 in an attempt to pressure the volatile country to abandon its nuclear program, according to Bloomberg.
Tensions flared between the U.S and Iran earlier this month after the Middle Eastern country threatened to block the Strait of Hormuz if an American aircraft carrier returned to the major shipping lane for oil. Bunker prices have grown almost 9 percent this month after tumbling in late 2011 and the most recent reports by Bunker World showed pricing for the ocean vessel fuel up about 40 percent from a year ago.
The World Bank cited a disruption to Middle East oil exports as a major risk to the global economic growth in 2012, saying escalating tensions “could lead to further disruption of supplies and higher oil prices in the shorter term — especially given low stocks and a market short of light/sweet crude."
The Washington-based financial institution expects crude oil prices to average about $98 a barrel this year.