Oil prices jumped 2 percent on Monday, with Brent futures rising back above $100 a barrel as a strike by workers and a planned lockout by companies threatened to completely shut Norway's crude oil production.
In post-settlement trading, prices came off session highs following news that Iran's foreign minister downplayed in an interview recent threats to shut the Strait of Hormuz and that Iran is ready to negotiate on uranium enrichment.
Negotiations on Sunday between oil workers and employers over pay and pensions could not resolve the dispute, raising the specter of the first complete shutdown of Norway's oil industry in more than 25 years.
The strike, in its third week, has cut oil output from western Europe's top producer by 13 percent and affected crude shipments. The government could force an end to the strike but a labor ministry spokesman said on Sunday there were no immediate plans to intervene.
Statoil, Norway's biggest offshore operator, said on Monday the company was preparing to start shutting down production after a midnight deadline (2200 GMT).
"Crude futures have climbed to new session highs on worries of a potential shutdown of Norwegian production," said Addison Armstrong, senior director, market research at Tradition Energy.
Brent August crude jumped $2.13 to settle at $100.32 a barrel, having reached $101.06.
U.S. August crude rose $1.54 to settle at $85.99 a barrel, after trading from $84 to $86.48.
Total crude trading volume for Brent was only 1 percent above the 30-day average, but outpaced U.S. crude dealings by more than 200,000 lots traded.
Monday's price strength followed the drops on Friday in both Brent, down more than 2 percent, and U.S. crude, down more than 3 percent, after a disappointing U.S. June jobs report.
With Norway's crude production facing a shutdown, Iran continues to try to circumvent sanctions on its crude exports. The sanctions were imposed by the United States and Europe to pressure Tehran to halt its disputed nuclear program.
An official said Saturday that Iran, OPEC's second-largest producer, has reached agreements with European refiners to sell some of its oil through a private consortium.
Iran's foreign minister on Monday downplayed threats by Iranian officials in recent months to block the Strait of Hormuz, the region's vital oil shipping lane, and said that Iran was ready to talk about halting 20 percent uranium enrichment if its needs for fuel were fully met.
In Iraq, oil exports resumed from Basra terminals in the south, with 1.536 million barrels per day shipped out on Monday, after bad weather halted exports on Sunday.