Crude oil prices gained in European trade Monday on fears that growing tensions between Iran and Western powers may threaten crude supplies from the Middle East.
Light sweet crude for January delivery gained 57 cents to $101.53 a barrel in electronic trading on the New York Mercantile Exchange during European trading hours. Brent crude oil futures for January delivery gained 0.69 percent to $110.670 a barrel on the ICE futures exchange in London.
The United States, Canada, United Kingdom and European Union imposed sanctions on Iran. The European Union last week imposed sanctions against 180 Iranian officials and companies on hopes that by damaging Iran economically it will convince the country to end its nuclear program.
Iran's official news agency reported Sunday that the country's armed forces shot down a spy drone belonging to the United States, a statement partly confirmed by an announcement made by the International Security Assistance Forces in Afghanistan on the same day that one of its reconnaissance aircraft went missing last week.
Iran's Foreign Ministry said that the global oil price would soar to above $250 a barrel if the West seriously considered blocking Tehran's ability to export oil.
Meanwhile, some signs of progress emerged in Europe over the weekend after Italian Prime Minister Mario Monti unveiled a 30-billion euro package of austerity measures Sunday.
French President Nicholas Sarkozy and German Chancellor Angela Merkel are scheduled to meet Monday night to try and get agreement on a joint plan on closer fiscal integration of the region, which will be presented at the Friday summit.