Benchmark crude oil prices will likely continue moving above USD 100 a barrel as an embargo on Iranian oil exports widens and fears mount that oil shipments may be disrupted from the Persian Gulf as a `war of words` escalates between Tehran and the US, CNBC`s weekly survey showed.

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Exactly 60% of this week`s sample group, or six out of ten respondents, expect oil prices to climb this week, two forecast a pullback while the remainder expect prices to remain unchanged.

"Sabre rattling by Iran will provide strength in the near term," said Shelley Goldberg, Director Global Resources and Commodity Strategy Roubini Global Economics. However, she noted the price spike may prove unsustainable. "The overriding macro forces of a weaker global economy, Eurozone disintegration concerns and a Greece exit, along with the potential for a hard or soft landing in China point to oil and commodity weakness in the medium to long term."

Iran has begun enriching uranium deep inside a mountain and sentenced an American to death for spying, angering the West and undermining hopes that diplomacy could avert further sanctions or war.

"We are holding consistently above USD 100," noted Peter Turville-Ince, Director at Compass Global Markets. "US crude is firmly supported for an upside move right now given the Iran situation, better economic data and even as the USD rises we are seeing crude remain firm which is a bullish sign."

He added: "If we see European equities find some support and the Euro can push higher or at least hold steady we would see crude prices rise sharply. Support is solid between USD 99-100.00 and only below USD 97.50 would we be sidelined in the crude markets."

Sandy Jadeja, Chief Technical Strategist at City Index pegged immediate support at USD 97 a barrel for US crude futures. "Nymex Crude Oil is bullish as long as it remains above USD 92.55 and initial upside target of USD 100 has been met. The next objective is now USD 107 with potential for much higher levels in 2012," he said.

On the flipside, Dhiren Sarin said he`s looking "for a bearish bias in oil as USD strength likely becomes a more dominant factor across global assets given the breakdown seen in EUR/USD."

The European Union is expected to bring forward a meeting of foreign ministers due to decide on an oil embargo on Iran by one week to January 23. France called for measures of "unprecedented scale and severity" against Tehran. Germany and Britain also condemned it.

Meanwhile, Tehran has responded to the new sanctions by threatening to shut the Strait of Hormuz, the outlet for ships carrying oil from the Gulf, guarded by a huge US-led international fleet.

Roubini Global Economics` Goldberg warned "blocking the Straight would be in Iran`s worst interests." Still, many believe the tensions could generate into conflict.

"The standoff with the US carrier group in the Gulf could escalate into war with Iran," said Greg Smith, managing director of Global Commodities Ltd. "There are high level political games and long term military strategy at play. If oil rallies it will exert even more pressure on the fragile US/Euro economies. Also food prices could move higher causing civil unrest in major importing nations."

Copyright 2011 cnbc.com

First Published:Jan 10, 2012 9:30 AM IST