LONDON: Brent crude oil rose above $100 on Monday after a weekend rescue package for Spanish banks calmed fears of an imminent euro zone collapse and a breakdown in nuclear talks between the UN and Iran renewed concerns over oil supplies.
The larger-than-expected Spanish rescue eased some worries over Europe's debt crisis, boosting stock markets and a range of commodities. But markets remained nervous with the pace of global growth uncertain and elections due in Greece on Sunday.
Brent futures for July rose as high as $102.21 a barrel, up $2.74, and traded around $100.55 by 0850 GMT. US crude futures jumped to as much as $86.64, and were $1.20 higher at $85.30 by 0850 GMT.
"The aid for Spanish banks has revived risk appetite, for a while at least," said Carsten Fritsch, commodity analyst at Commerzbank in Frankfurt. "This positive market sentiment could last some days although there is still event risk -- the Greek elections, Iran -- that could prevent big gains from here."
Euro zone finance ministers agreed on Saturday to lend Spain up to 100 billion euros ($125 billion), making the country the fourth to seek assistance since Europe's debt crisis began.
Yet, with the economy contracting, one in four Spanish workers out of a job, and Greek elections next weekend overshadowing the entire zone, investors are wary how far the latest deal will go in helping the region tackle its debt crisis.
GREECE
Leaders of Greece's two traditional ruling parties warned on Sunday of political stalemate after parliamentary elections next week and called for a government of national unity to prevent a repeat of the confusion that followed the last vote in May.
Opinion polls cannot now be published in Greece so the outcome of the June 17 elections is uncertain.
The result will decide Greece's future in the euro with voters split over a 130 billion euro international bailout which has kept afloat the economy, now in its fifth year of recession, at the price of harsh and bitterly resented austerity measures.
A slide in the dollar also helped boost oil. The dollar index slipped 0.65 percent while the euro steadied.
On the supply front, fears of a disruption to Middle East oil supplies resurfaced with the UN nuclear watchdog and Iran failing to unblock a probe into suspected atom bomb research by the Islamic state, dimming chances for success in higher-level negotiations between Tehran and major powers later this month.
The International Atomic Energy Agency, using unusually pointed language, said no progress had been made in the meeting aimed at sealing a deal on resuming the IAEA's long-stalled investigation, and it described the outcome as "disappointing".
The statement came just weeks after UN nuclear chief Yukiya Amano said he had won assurances from senior Iranian officials in Tehran that an agreement would be struck soon.
The outlook for the global economy remained uncertain.
China's inflation, industrial output and retail sales all flagged in May for a second straight month of sluggish growth, data showed.
India has reported its weakest quarterly growth in nine years and Brazil almost stalled in the first quarter, raising doubts as to how much emerging markets can drive the world economy as industrialised nations struggle with debt.
Supportive for oil were figures showing China's crude imports rose to a record 25.48 million tonnes, or about 6 million barrels per day in May, up 18.2 percent from a year ago.
But analysts cautioned against optimism as actual demand from users remained weak and the bulk of oil imported in May was likely to have been moved into storage.
China's implied oil demand inched up only 0.4 percent in May year-on-year, after April's first yearly decline in over three years.
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