02/13/2012 10:43 EST | Updated 04/14/2012 05:12 EDT

Oil rises above US$100 as Greece approves new austerity measures to secure bailout

NEW YORK, N.Y. - Oil prices rose Monday after Greece took a key step away from a default on its huge government debt that could hurt Europe's economy and cut demand for oil.

Crude prices also got a boost from renewed tensions about Iran's oil supplies after some shipping companies said they would stop loading Iranian crude on tankers because of pending U.S. and European sanctions against Iran.

Benchmark West Texas Intermediate crude oil rose $2.24, or 2.3 per cent, to finish at US$100.91 a barrel Monday in New York. Brent crude, which is used to price many international varieties of oil, rose 64 cents to end at US$117.30 a barrel in London.

Greek lawmakers over the weekend approved deep spending cuts needed for the country to get more bailout money and avoid default on its massive debt.

European leaders will meet Wednesday to discuss giving Greece more funds. Without a deal Greece faces a crippling bankruptcy that could affect the broader European economy. That in turn could slow demand for oil.

Investors were encouraged that Greece would get the bailout money it needs, but "it's not like there is absolute certainty that everything is solved," said Michael Lynch, president of Strategic Energy & Economic Research.

Meanwhile, several shipping companies have stopped taking on shipments of Iranian oil because of U.S. and European sanctions that will start taking effect in a few months. The U.S. and the EU want to deprive Iran of the oil income it needs to fund what they believe is a program to build nuclear weapons.

"The geopolitical risk premium may increase further this week given that several (oil tanker) operators are now purposely shunning Iran due to questions surrounding the validity of EU-based insurance in light of the sanctions," said analysts at JBC Energy in Vienna. The EU embargo on Iranian crude also halts insurance on ships with an EU link that would carry Iran's oil, effectively preventing them from hauling it.

JBC also estimated that Iran's oil production has fallen by more than 200,000 barrels a day since August due to the lack of maintenance and investment in Iran's oilfields. Iran exports three per cent of the world's daily supply of oil, including about 500,000 barrels to Europe.

Evercore Partners shipping analyst Jonathan Chappell said he doesn't believe the action by the shipping companies will have a significant impact on prices because Iran can sell more oil to India and China. "The Iranians do have their own fleet to move some of their oil and they also may just decide to store oil on ships if there is no end market," he said.

In other energy trading, heating oil fell two cents to finish at US$3.16 a U.S. gallon, gasoline futures rose four cents to end at US$3.01 a gallon and natural gas fell five cents to finish at US$2.43 per 1,000 cubic feet.