U.S. oil prices fell below $97 per barrel Monday as growing supplies offset concerns that President Barack Obama and other Western leaders will make it tougher for Iran to sell crude.
Crude supplies in the U.S. have increased for the past three weeks at a key delivery point in the Midwest, and they're expected to keep growing this year as the petroleum industry ramps up drilling projects. Oil companies like Exxon Mobil Corp. say they want to increase North American oil production, which is more profitable than natural gas.
Abundant supplies helped keep prices in check Monday after Obama ordered new sanctions against Iran. With oil supplies not a problem in the U.S., the world's largest oil consumer, it would take much more than proposed sanctions to spark a big reaction in the benchmark price, analysts said.
"You get bullets flying, you'll see prices spike again," independent analyst Stephen Schork said.
Until then, traders will focus on weak energy markets in the U.S. The government said last week that the country is using less petroleum than a year ago, and supplies have been growing in Cushing, Okla., where benchmark crude is delivered.
Crude supplies should keep growing until spring, Schork said, when a pipeline project moves more Midwest oil to the Gulf Coast, where it can be exported.
Prices fell less than 1 percent Monday, a relatively stable move on a day when the world's third-largest exporter, Iran, was slapped with new international sanctions.
The sanctions are designed to make it more difficult for Iran to sell its oil through traditional banking routes. The West hopes this will force Iran to sell its oil at a discount, and reduce the oil revenue Iran uses to run its economy and fund its nuclear operations.
Analysts say any effect on supplies already has been priced into futures contracts.
For the past few months, the U.S. and other Western nations have been leaning on Iran to abandon its nuclear program. The fear is that Iran is building a nuclear weapon, though Iran denies that and says its efforts are strictly for peaceful purposes. European nations plan to stop buying Iranian oil by summer. Iran has threatened to block oil tanker shipments in the Persian Gulf if the embargo is implemented.
On Monday benchmark crude fell 93 cents to end at $96.91 per barrel in New York.
Meanwhile, the price of heating oil and Brent crude, which is used to price foreign varieties of oil, rose Monday as winter storms kept much of Europe in a deep freeze. Plunging temperatures across the continent boosted demand for petroleum-based fuels that are already in short supply.
Italian energy company ENI said Russian natural gas supplies to Italy are 20 percent lower than normal, and that supplies could keep falling. Russian energy company Gazprom has curtailed the amount of gas it sells to Europe as Russia deals with the cold spell.
Brent crude rose $1.35 to finish at $115.93 per barrel in London. Heating oil rose 6 cents to end at $3.17 per gallon and gasoline futures rose about a penny to finish at $2.93 per gallon. Natural gas futures rose 5 cents to finish at $2.55 per 1,000 cubic feet.
U.S. retail gasoline prices were unchanged from Sunday at a national average of $3.48 per gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular is about 11 cents higher than it was a month ago and 36 cents higher than the same time last year.
AP Energy Writer Jonathan Fahey contributed to this story from New York.