Brent oil rises above $107 on new Iran sanctions

SINGAPORE, Nov 22 (Reuters): Brent crude rose above $107 a barrel Tuesday as fresh sanctions on Iran, and the prospect of possible military action, offset persistent worries about the health of Western economies and their fuel demand. The United States, Britain and Canada on Monday announced new sanctions on Iran's energy and financial sectors, ratcheting up pressure on Tehran to stop its nuclear programme. Investors fear oil prices could spike in the event of air strikes on Iran's nuclear sites, which could suddenly cut supply from OPEC's second largest crude producer and disrupt trade in the Strait of Hormuz, the world's most important oil transit channel.The uncertainty helped bolster prices, under pressure from the worsening debt crisis in Europe and the United States that is expected to hurt economic growth and fuel demand. A decline in global oil demand may prompt the Organisation of Petroleum Exporting Countries (OPEC) to tighten output at its December meeting, Iraq's oil minister said. ICE Brent January crude rose 61 cents to $107.49 a barrel by 0612 GMT, after falling for four consecutive sessions. Brent has risen 13 percent this year, and is set for a third annual gain. U.S. January crude was up 19 cents to $97.11 a barrel, after three sessions of losses. "Iran adds a risk premium to crude," said Jonathan Barratt, managing director of Commodity Broking Services. US sanctions have already made it extremely difficult for many global oil companies and traders to obtain bank financing to trade Iranian crude, less than a third of which goes to Europe, with the rest flowing to China and India. France has urged the European Union and other nations to immediately freeze the assets of Iran's central bank and to suspend purchases of Iranian oil, steps it described as "sanctions on an unprecedented scale". Last Tuesday, Iran's deputy oil minister said any new US sanctions would not stop Iran exporting petrochemicals to the European Union. "Depending on how the issue escalates, we may see $150 crude which will have dramatic concerns especially as Western economies are trying to emerge from a slowdown," Barratt said.