The price of oil climbed nearly 2 percent Monday as Norway prepares for a shutdown of its North Sea crude production.
Norway's oil industry, which produces more than 3.8 million barrels of oil and natural gas per day, says platforms will switch off after 6 p.m. EDT Monday due to a strike by offshore oil workers over retirement benefits. The government still may intervene to keep oil and gas flowing.
A shutdown would seriously impact European oil supplies, cutting off a major source of crude as the European Union officially begins an embargo of Iranian oil. Norway exports most of its crude to the United Kingdom, the Netherlands, France and Germany. The U.S. also imports a small amount of oil from Norway.
Benchmark U.S. crude rose $1.44 to $85.89 per barrel in New York. Brent crude, which comes from the North Sea and sets the price for oil imported into the U.S., added $1.81 to $100 per barrel in London.
Independent analyst and trader Stephen Schork said oil could jump higher if and when Norway's production stops. Most traders expect the country's government to force an end to the strike. "There's a lot of skepticism about this strike," Schork said. "This isn't Libya" where rebels forced oil fields to close for several months last year. He noted that the pension dispute is a far less serious matter.
If the government doesn't intervene, oil would stop flowing shortly after the deadline. A complete shutdown could take up to four days. The Norwegian Oil Industry Association estimates the strike could cost the industry $296 million per day.
Meanwhile, gasoline prices rose 2.4 cents over the weekend to a national average of $3.38 per gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular has risen by an average of nearly 6 cents since last week, but it's still about 23 cents cheaper than the same time last year.
In other futures trading, heating oil rose 4 cents to $2.75 per gallon and wholesale gasoline rose by 4 cents to $2.75 per gallon. Natural gas rose 10 cents to $2.88 per 1,000 cubic feet.