LONDON: Brent crude oil climbed towards $99 a barrel on Monday as failed labour talks stoked worries of an imminent shutdown of Norwegian oil production, while hopes China would ease monetary policy also supported prices.
Negotiations between Norway's oil workers and employers over pay and pensions failed for a third time on Sunday and the country was just hours away from the first complete shutdown of its oil industry in more than 25 years.
The strike has already cut oil output from Norway, western Europe's top producer, by 13 percent and hit crude shipments.
The Oslo government could force an end to the strike but a labour ministry spokesman said on Sunday there were no immediate plans to intervene in the dispute, which could hit around 1.2 million barrels of oil equivalent (boe) per day.
Brent rose 99 cents to a high of $99.18 a barrel before easing back to trade around $98.65 by 1146 GMT. US crude was up 34 cents at $84.79.
"The price-supporting effect of the oil strike in Norway will probably be only temporary in nature," said Carsten Fritsch, analyst at Commerzbank in Frankfurt.
"We expect the Norwegian government to step in to stop this strike, so that support for prices might be gone quite soon," Fritsch said. "The more the strike escalates, the sooner it is likely to end."
Chinese data showed consumer inflation cooling in June, leaving room for Beijing to ease policy without stoking prices and helping commodities recover from recent losses.
CHINA
Investors remained cautious ahead of Chinese GDP data later this week, which is likely to show the weakest expansion in three years.
Premier Wen Jiabao said on Sunday China, the second-biggest oil consumer, needed to adjust policy to support its economy. In March, Wen cut the 2012 growth target to 7.5 percent, which would be the lowest since 1990.
Slower economic growth in China and the United States and a deepening euro zone debt crisis helped push down Brent by 20 percent in the second quarter, the largest three-month loss since the 2008 financial crisis.
Euro zone finance chiefs were trying on Monday to flesh out plans to reinforce the single currency.
But investors remained sceptical that much progress could be made as Spanish and Italian government debt stayed at unaffordably high levels. The euro hovered near a two-year low and European shares fell on Monday.
Iran continues to search for ways to circumvent sanctions on its crude exports imposed by the United States and Europe to pressure Tehran to halt its disputed nuclear programme.
The second-largest OPEC producer has reached agreements with European refiners to sell some of its oil through a private consortium, an official told the local news agency on Saturday.
Bad weather stopped crude exports from Iraq's southern Basra terminals, although the Russian Black Sea port of Novorossiysk resumed normal operations after a flood forced a suspension of loadings.
Libya has resumed oil production and exports after political protests last week while Yemen says it will resume oil exports from its Maarib province after attacks from militants halted shipments for over a year.
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