NEW YORK – Oil prices rose moderately on Monday (Tuesday morning GMT), after the European Union imposed an embargo on Iranian crude oil exports as part of tough new sanctions aimed at stopping Tehran from funding its controversial nuclear program.

New York’s main contract, light sweet crude or West Texas Intermediate for March delivery rose 1.25 dollars to 99.58 dollars a barrel, after the embargo which is widely expected to be announced.

In London, Brent North Sea crude for March delivery rose 72 cents to 110.58 dollars per barrel. After weeks of talks, the European Union on Monday agreed to ban oil imports from Iran as part of a joint effort with the United States to pressure Tehran to stop the alleged nuclear weapons program. Tehran is developing nuclear weapons.

The EU also froze assets of the country’s central bank “while ensuring that legitimate trade can continue under strict requirements.”
The impact of sanctions on the market is limited.

While they immediately set a ban on new oil imports from Iran, the existing contract will be abolished until 1 July, a move designed to limit the impact on countries such as Greece, which relies heavily on Iranian oil.

“… The import ban will be implemented gradually over a period of several months, which would dampen the inflationary impact of oil prices,” said Commerzbank analyst Carsten Fritsch.

Iran has sold about a fifth of crude oil to European Union countries, with Greece, Spain and Italy the main buyer. ”With the volume of imports of 450 thousand barrels daily, or nearly 20 percent of Iran’s total oil exports, the EU is the second largest oil customer of Iran,” said Fritsch.

Andy Lipow of Lipow Oil Associates said: “Hope for the European Union is that Iran will sell less crude hers, thus affecting income.”

“Meanwhile, the European Union countries that buy Iranian crude oil would need to find alternative sources,” he said, pointing to Saudi Arabia, which has increased production, and Kuwait.