LONDON, Dec 5 (Reuters) - Oil prices rose on Monday with Brent crude futures up near $111, extending last week's gains as rising tensions between Iran and the West increased the risk of disruption to crude shipments by the world's fifth-largest oil exporter.
Iran warned on Sunday that any move to block its oil exports would more than double crude prices with devastating consequences for a fragile global economy
Brent crude was up $1.14 at $111.08 a barrel by 1313 GMT, after last week posting a gain of more than 3 percent, its best weekly gain since mid-October. Earlier Brent had pushed to an intraday high of $111.22 a barrel.
U.S. crude was up 81 cents to $101.77 a barrel, having posted a gain of 4.3 percent last week.
Christopher Bellew, an oil trader with Jefferies Bache in London, said that worries about Iran and Syria were helping to buoy oil prices. "If Iranian exports were suspended that would be very significant as the market is tight already," he said.The European Union is considering a ban - already in place in the United States - on Iranian oil imports
. The storming of the British Embassy in Tehran last week has opened the door for tougher action against Iran which is thought to be working on a nuclear bomb.
"The risk of disruptions to oil supplies remains high," said Christophe Barret, global oil analyst at Credit Agricole CIB. An embargo on Iranian oil "would introduce severe disruption to refining in several EU countries" he said.Barret added that speculation about possible military strikes on Iranian nuclear sites have helped to increase the risk premium on oil prices
But on Friday, U.S. Defense Secretary Leon Panetta made one of his most extensive arguments to date against
any imminent military action against Iran over its nuclear programme, saying he was convinced sanctions and diplomatic pressure were working.
Israel has called a nuclear-armed Iran a threat. Iran says it is enriching uranium for peaceful purposes.
In Syria, EU sanctions are already biting with Royal Dutch Shell shutting down its activities there.
On Monday, Gulfsands Petroleum said it was reviewing the impact of the latest EU sanctions against Syria on its production activities and its contracts with the Syrian government and the General Petroleum Corporation (GPC).
"Syria was exporting about 400,000 barrels per day at the start of the year and it is probably exporting nothing at the moment," said Bellew.
Oil ministers from OPEC members Kuwait, Oman and Bahrain said that the market was well supplied, echoing similar comments by Qatar's energy minister and the OPEC Secretary-General Abdullah al-Badri at the weekend.
OPEC will meet next week in Vienna, but with Iran holding the presidency of the OPEC conference until the end of the year, analysts do not expect much from the meeting. Iran is OPEC's second-largest producer.
The oil market is also eyeing developments in the eurozone which reach a critical phase this week as European leaders work towards a rescue plan to be unveiled at a crucial summit in Brussels on Friday.
"There will be a lot of volatility this week with all the European news," said Barret. "Prices can be expected to move significantly throughout - it's a big week for Europe."
The Chinese economy showed further signs of slowing, raising hopes that the central bank would take more action to support growth in the world's second largest oil consumer.
The HSBC Purchasing Managers' Index (PMI) for China's services sector fell to 52.5 from 54.1 in November, marking its slowest rate of growth in three months. (Additional reporting by Francis Kan in Singapore; editing by William Hardy)