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By Luciana Lopez
January 4, 2012 3:07 PM EST
A European Union agreement to ban Iranian oil imports boosted crude oil prices on Wednesday, but persistent worries about a euro zone debt crisis hobbled the single currency and European stocks.
EU diplomats said they reached a preliminary deal to ban imports of Iranian crude but have not decided when to put it in place.
The agreement sent oil to a seven-week high. Brent February crude hit $113.97 per barrel, its highest since November 14, before paring gains to trade up 1.08 percent at $113.34.
U.S. crude oil futures added 0.2 percent to $103.17 per barrel.
Meanwhile, stocks and the euro struggled after Italy's biggest bank, UniCredit, priced a 7.5 billion euro capital hike at a massive discount. That level, in turn, could discourage other lenders from tapping the market to raise money.
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UniCredit slumped 14.5 percent, the biggest blue-chip loser in Europe.
U.S. stocks pared losses after data showed that new orders for factory goods rose solidly in November. Major indexes were little changed in mid-afternoon trading.
CRUDE PRICES SEEN RESTRAINED
Analysts said crude price moves were relatively restrained because no details had emerged about when sanctions would be implemented. Some analysts said their potential to affect oil prices may be exaggerated.
"India, China and some other Asian countries may end up getting a reduced price on Iranian oil and that could be good for their economies, but European countries will have to find other sources," said Gene McGillian, an analyst with Tradition Energy in Stamford, Connecticut.
The United States supports the ban and believes Tehran's oil revenues can be choked off without disrupting global oil markets, a U.S. Treasury official said.
The EU agreement came after Iran threatened Tuesday to take action if the U.S. Navy moves an aircraft carrier into the Gulf. Oil shot up after the Iranian warning.
The single currency fell 0.81 percent to $1.2944, within striking distance of its 2011 trough of $1.2858, hit in the last week of December.
The FTSEurofirst 300 index of top European shares closed down 0.63 percent in low volume, capping a four-session streak of gains.
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