London, Jan 23 (Reuters):Oil prices rose to near $111 a barrel on Monday after the European Union foreign ministers agreed to ban imports of Iranian oil from the start of July, eliciting further threats from Iran to close the key shipping channel the Strait of Hormuz.
Brent crude oil futures were up $1.11 at $110.97 a barrel by 1248 GMT. U.S. crude was up $1.05 to $99.38 a barrel.
Both contracts rose after threats from an Iranian member of parliament to close the Strait of Hormuz, a key-shipping channel, if Iran's exports are blocked.The Iranian MP was responding to the EU agreement for an immediate ban on all new contracts to import, purchase or transport Iranian crude oil and petroleum products.
However, EU countries with existing contracts for Iranian oil and petroleum products will have until July 1 to complete those contracts
“In spite of the delay to full implementation, prices have moved higher,” said Christopher Bellew, a trader at Jefferies Bache.“It may never be fully implemented. Heaven knows what will happen between now and the first of July.
Oil prices were also supported by a weaker dollar, which means that commodities priced in dollars appear cheaper for those using other currencies.
The dollar was down 0.52 percent against a basket of currencies at 1218 GMT.
“Crude oil is finding strong support from a weaker dollar, or rather a stronger euro on the back of rising hope that some sort of solution might be reached with creditors on Greece's debt,” said analysts at Standard Bank.
Greece faces a key repayment date on March 20, when 14.5 billion euros ($18.7 billion) is due.
EU governments also agreed to freeze the assets of Iran's central bank and to ban all trade in gold and other precious metals with the bank and other public bodies, officials said.
However, it will review the measures before May 1 to assess whether EU states are able to find sufficient alternative sources of crude. Europe is Iran's second-largest oil customer after China.