Crude oil prices hit an eight-month high on Monday above $121 a barrel as the threat of a large supply disruption involving Iran became the talk of the energy market.
The jump in prices came as executives, traders and policymakers gathered in London for International Petroleum Week, the industry’s big annual meeting.

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For the second year in a row, the risk of supply disruption is the dominant theme for IP Week. In 2011 Libya was the main worry. This year it is Iran.
ICE April Brent rose in early trade to $121.15 a barrel, the highest level since last June. It later traded 47 cents higher at $120.05. Nymex March West Texas Intermediate rose to a session high of $105.44 a barrel, the highest level since May.
Wall Street banks briefing their clients during IP Week have painted a bullish outlook. JPMorgan raised its forecast for average Brent prices in 2012 to $118 and predicted that oil prices could rise to as high as $135 in the course of the year.
But Christophe de Margerie, chief executive of French oil group Total, sought to calm down the market, saying it had had no trouble finding alternative sources of crude since it ceased trading with Iran earlier this year. Mr de Margerie said the 0.7 million barrels a day of Iranian exports that go to Europe and Japan represented less than 1 per cent of global oil production of about 88m b/d.
“We don’t think that this 0.7 [m b/d] should trigger any concern for the market and for the buyers,” he said, adding that oil prices were rising due to Iran-related “noise”, rather than any real supply disruptions. “Let’s calm down,” he said.
That message was reinforced by the International Energy Agency. Didier Houssin, the IEA’s director of energy markets and security, said buyers of Iranian oil were already lining up alternative suppliers in preparation for the oil embargo against Tehran.
But he acknowledged that geopolitical problems were putting a floor under prices, which have stayed high despite a series of downward revisions in global oil demand growth.
Oil traders remain worried about supplies, with disruptions in South Sudan and Yemen reducing production by roughly 500,000 b/d. Moreover, Syrian output is down due to the impact of European Union sanctions and Libyan production, at about 0.9-1.0m b/d, has yet to recover its pre-civil war level of about 1.6m b/d.
Iran on Monday said that it would only supply importing nations signing long-term contracts, a move to stop its customers from reducing imports as sanctions over the country’s nuclear programme hit oil revenues.
“Iran is ready to supply its oil only when 2- to 5-year contracts are signed,” Ahmad Ghalebani, the head of National Iranian Oil Company, which handles oil marketing and sales, told local reporters. “We will not sign urgent contracts with any country.”
Mr Ghalebani warned that “if hostile acts of some other European states continued”, oil exports to those countries could be disrupted. Tehran over the weekend halted oil exports to France and the UK, but the move is largely symbolic as both nations import almost no oil from Iran.