Oil prices hit nine-month highs today after Iran halted sales to France and Britain, and as China eased credit policy amid expectations of a bail-out deal for Greece.
Earlier, Brent and New York contracts reached $121.15 and $105.44 a barrel - the highest levels since May 5 2011.
This evening, Brent North Sea crude stood at $120.14 a barrel, up 56 cents from Friday's closing level. US crude jumped $1.84 to $105.08.
Iran on Sunday announced that it was halting its oil sales to France and Britain in retaliation for a phased EU ban on its crude, which has yet to take full effect.
The decision is not expected to have a big impact as France last year bought only 3% of its oil from Iran, while Britain is believed to no longer be importing Iranian oil at all.
But it is seen as a warning shot to other EU nations that are much more dependent on imports from the Islamic republic, including Italy, Spain and Greece. Iran today insisted that it would cut oil exports to more EU nations if they remain "hostile".
Iran pumps 3.5 million barrels per day, of which it exports 2.5 million barrels, making it the world's fourth-biggest oil producer.
Oil traders also reacted to news at the weekend that China's central bank decided to cut commercial banks' reserve requirement ratio by 0.5 percentage points from February 24 to ease restrictions on lending.
The reduction by the People's Bank of China in the amount banks must hold in reserve will bring the ratio for most large banks to 20.5 percent, effectively increasing the amount they can lend.
The move is a sign the government is continuing to ease restrictions put in place to curb surging inflation and property prices.
Meanwhile, there were growing signs that a new bail-out for Greece could be finalised at last.
