UPDATE: Report Of Iran Oil Cut To Europe Lifts Oil Prices

A report Wednesday from an Iranian state television broadcaster--later denied by the Iranian government--saying Tehran had cut its oil exports to six European nations lifted European oil prices Wednesday, exposing oil markets' nervousness over any abrupt Iranian oil disruption.

The report was the latest from Iran to shock oil markets after the country's threats to close the Strait of Hormuz had sent oil prices higher in recent weeks. The strait is a strategic Persian Gulf shipping artery through which a fifth of world oil supplies are transported.

The Iranian broadcaster Press TV said on its website: "In response to the latest sanctions imposed by the EU against Iran's energy and banking sectors, the Islamic Republic has cut oil exports to six European countries," naming France, the Netherlands, Spain, Italy, Portugal and Greece as targets of the measure.

Although Portugal buys no oil from Tehran, the five other countries have been among the EU's largest importers of Iranian oil, together receiving 659,000 barrels a day in September, according to data from Eurostat, the EU statistics service.

Some companies, such as France's largest oil company, Total SA (TOT, FP.FR), have since stopped buying or shipping oil from Tehran. Royal Dutch Shell PLC (RDSA.LN, RDSA, RDSB.LN, RDSB) declined to comment on the report and BP PLC (BP, BP.LN) couldn't immediately be reached for comment.

The International Energy Agency, which coordinates energy policy for industrialized nations in the Organization for Economic Cooperation and Development, declined to comment on the Iranian reports and oil-price moves.

The Press TV report lifted the European benchmark Brent crude price on ICE Futures Europe as high as $119.99 a barrel during the session to a six-month intraday high.

Oil prices eased somewhat after an Iranian oil-ministry spokesman and an Iranian diplomat in charge of Western Europe denied the Press TV report to separate news agencies. Still, the Brent contract ended the session at $118.93, an eight-month settle high.

Italy's foreign minister, Giulio Terzi, denied that Iranian oil exports to Italy have been halted.

Iranian oil officials and an Iranian diplomat in one of the six European countries Wednesday also told Dow Jones Newswires they hadn't received any official notification about a decision to cut oil exports.

"If there had been a decision, we would have been aware," the diplomat said.

Despite the denials, subsequent reports suggested a preemptive embargo still could be in the cards. The Mehr agency quoted an unnamed Iranian oil official as saying Italy, Spain, Portugal and Greece were given an ultimatum to extend their long-term contracts or get their supply cut.

So far, Iran has reacted defiantly to Europe's planned embargo, saying it could easily find new customers. The National Iranian Oil Co. has raised the price of its oil for European customers, even as stronger sanctions make it increasingly difficult to purchase its crude, a person who had seen the Iranian oil official selling prices told Dow Jones Newswires Wednesday.

Iranian lawmakers and the country's oil minister have previously threatened to abruptly interrupt oil exports to some European Union countries in response to a full EU embargo, which is due to come into force July 1.

A top Iranian lawmaker had said Tuesday on the Iranian parliament's website the preemptive ban was still under consideration, though there was a consensus to implement it.

Even though it has been denied, the Iranian Press TV report comes during increasing tensions in the Middle East.

Iran's President Mahmoud Ahmadinejad Wednesday unveiled further progress on its nuclear reactor, though Iran has denied western claims that it is building atomic weapons and has said the program is peaceful.

Iran has been accused of bomb blasts this week in Bangkok and New Delhi, while Israel has warned it could seek to destroy Iran's nuclear facilities.

Elsewhere, some unrest in large oil-producing nations such as Saudi Arabia and Nigeria also unsettled oil markets.

"There is little doubt that the increase in tensions in these regions accompanies an increase in the risk of disruption to oil supplies," U.S. bank J.P. Morgan said Wednesday in a note.

-By Benoit Faucon, Dow Jones Newswires; +44 77 601 777 36; benoit.faucon@dowjones.com

--James Herron, Alexis Flynn, Sarah Kent and Selina Williams in London, Patricia Kowsmann in Lisbon and Liam Moloney in Rome contributed to this article.

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