Oil prices leaped to an eight-month high on Monday after Iran announced it was halting crude exports to Britain and France ahead of a European Union embargo.
Brent crude rose to more than $120 per barrel on Monday, it highest level since mid-June last year. The price per barrel has risen by about 20 percent since December, according to Sky News.
Iran is the world’s fifth-largest oil exporter. It halted sales to British and French companies on Sunday in retaliation against increasingly stringent EU economic sanctions, due to kick in in July, over its controversial nuclear program.
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Monday’s rise came as a team of UN inspectors arrived in Tehran to hold talks with the Iranian government regarding its uranium enrichment work, which the West claims is aimed at developing atomic weapons.
Traders said that policy developments in China and hopes that a second bailout package for Greece will be agreed on Monday had also led to a jump in prices, The Guardian reported.
China’s central bank cut banks’ capital reserve requirements over the weekend, freeing up tens of billions of dollars. Improvements in the performance of the Chinese and US economies, as well as EU countries’ search for new oil suppliers and Iran’s hunt for new buyers, also fuelled the spike, according to the BBC.
Iran insists its nuclear program is peaceful and was enraged by the EU’s decision in January to impose a boycott on its oil. It responded by threatening to close the Strait of Hormuz, the primary Gulf oil shipping lane.
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