Oil rises to USD 99 on stimulus hopes, Iran

Oil rose to USD 99 a barrel on Tuesday as investors bet on further policy action to support global economic growth and tension over Iran and a strike in Norway kept oil supply concerns in focus.

A European Union embargo on Iranian oil started on Sunday and an oil workers' strike in Norway, the world's eighth-largest oil exporter whose crude helps set North Sea Brent prices, has started to slow crude exports.

Brent crude gained USD 1.70 to USD 99.04 a barrel by 0910 GMT, after earlier hitting an intraday high of USD 99.15. US crude rose by USD 1.16 to USD 84.91.

"Iran is always a factor and it has the potential to have a dramatic impact on oil prices," said Ben Le Brun, a markets analyst at OptionsXpress in Sydney.

"Traders are also expecting to see a policy response from China and a potential for more stimulus from the US Federal reserve to support the economy."

The euro zone debt crisis and weak economic data from the top two consumers of oil, the United States and China, have fuelled expectations of government measures to ease monetary policy. European shares rose on Tuesday.

The European Central Bank meets on Thursday and is expected to cut its main interest rate by 25 basis points to 0.75%.

On the oil supply front, Iran's National Security and Foreign Policy Committee has drafted a bill to try and stop oil tankers from passing through the Strait of Hormuz to countries that support sanctions against it.

Iranian threats to block the waterway have grown in the past year amid tightening Western sanctions. About 17 million barrels a day of oil from the top Middle East producers sailed through the narrow strait in 2011.

In Norway, a strike by offshore oil and gas workers has started to slow crude exports, according to a trading source.

Reports this week, including from the American Petroleum Institute later on Tuesday, may show a further drop in US crude inventories. Analysts in a preliminary Reuters poll expect a 2.2 million-barrel drop in stocks.