In reaction, Brent North Sea crude for April delivery surged to USD 119.99 a barrel in early afternoon deals, reaching a point last seen on August 1, 2011. And New York's main contract, West Texas Intermediate (WTI) light sweet crude for delivery in March, soared as high as USD 102.54 per barrel, which was the highest level since January 12.
Iran said 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 to an EU ban on Iranian oil imports that is being phased in as existing contracts expire up to July 1. But after world oil prices spiked -- in part because Iran's English-language Press TV had reported Iran had already "cut" oil exports to those countries -- media reported that no steps had yet been taken to reduce EU oil exports.
"Oil prices have jumped on the announcement that Iran intends to suspend crude exports to six EU countries. But we expect the impact to be short-lived for three main reasons," said Capital Economics analyst Julian Jessop.