Oil prices jumped to a nine-month high above US$105 a barrel on Monday after Iran said it had halted crude exports to Britain and France in an escalation of the dispute over the Middle Eastern country's nuclear program.

By early afternoon in Europe, benchmark West Texas Intermediate March crude was up $1.91 at US$105.15 a barrel in electronic trading on the New York Mercantile Exchange. Earlier in the day, it rose to $105.21, the highest since May. The contract had risen 93 cents to settle at $103.24 a barrel in New York on Friday.

Markets in the United States are closed Monday for the Presidents Day holiday.

Iran's oil ministry said Sunday that it stopped crude shipments to British and French companies in an apparent pre-emptive blow against the European Union after the bloc announced sanctions planned this summer on Iran's crucial fuel exports. They include a freeze of the country's central bank assets and an oil embargo set to begin in July.

Iran's oil minister, Rostam Qassemi, had warned earlier this month that Tehran could cut off oil exports to "hostile" European countries. The 27-member EU accounts for about 18 per cent of Iran's oil exports.

The EU sanctions, along with other punitive measures imposed by the United States, are part of Western efforts to derail Iran's disputed nuclear program, which the West fears is aimed at developing atomic weapons. Iran denies that allegation and says its nuclear program is for peaceful purposes.

Analysts said Iran's announcement would likely have minimal impact on supplies, because only about three per cent of France's oil consumption is from Iranian sources, while Britain had not imported oil from the Islamic republic in six months.

"The price rise is more a reflection of concerns about the further escalation in tensions between Iran and the West," said commodity analyst Caroline Bain of the Economist Intelligence Unit. "Banning the tiny quantities of exports to the U.K. and France involves very little risk for Iran, indeed quite the opposite, it catches the headlines and leads to a higher global oil price, which is something Iran is very keen to encourage."

Oil prices also rose on hopes that Greece's new bailout deal will be approved on Monday as well as by China's decision to boost its money supply bid to spur lending and economic growth. China's central bank said Saturday it will lower the ratio of funds that banks must hold as reserves, a move that frees tens of billions of dollars.

Oil has jumped from US$96 earlier this month amid optimism the global economy may grow more this year than previously expected. J.P. Morgan raised its Brent crude price forecast to as high as US$135 from $120, on Monday.