Reports reveal that the Brent and New York contracts reached $121.15 and $105.44 per barrel in early trading on Monday, Feb 20, the highest levels that has been recorded since May 5, 2011.
"Iran’s decision to halt oil exports to France and Great Britain is commonly cited today as the reason for the price rise," said Carsten Fritsch, Commerzbank analyst.
"Since Iranian oil exports to both these countries are virtually negligible, however, the news is likely to have only a psychological effect, fuelling uncertainty on the oil market," Fritsch said.
"The fact that EU finance ministers are expected to approve further assistance for Greece this evening, plus the lowering of the reserve requirement ratio for banks in China, are providing the financial markets with positive ‘background noise’."
Iran on Sunday, Feb 19 had said that it would halt the oil export to Britain and France. The country had earlier threatened to ban its export to six EU nations, which is yet to take full effect.
The decision would, however, not impact France as it had last year bought only 3 percent of its oil from Tehran, while Britain is believed to be no longer importing oil from the Islamic republic.