Oil rose above 4%

Oil surged on speculation that central banks from Europe to China will ease monetary policy to spur growth while sanctions against Iran curb supply.

Prices gained as much as 5.1 percent as the European Central Bank is forecast to cut interest rates this week. A state-owned newspaper in China said the time is right to increase liquidity in the banking sector. Iran fired several missiles during a three-day military exercise as the country threatened to block tanker traffic in the Strait of Hormuz.

The European Central Bank and the Bank of England will announce interest-rate decisions on July 5. ECB officials will lower their benchmark rate by 25 basis points to a record low 0.75 percent, according economists surveyed.

A European Union embargo on Iranian oil took full effect on July 1 after exemptions on some contracts and insurance ended. Iran’s crude exports may drop to about 1 million barrels a day, Goldman Sachs said in a report yesterday. The country pumped 3.16 million barrels a day in June, the second biggest producer in the Organization of Petroleum Exporting Countries after Saudi Arabia, according to estimates.

Iran’s parliament is working on a bill to close the Strait of Hormuz to oil tankers linked to countries applying new EU sanctions, a lawmaker from the national security committee told Jam-e-Jam newspaper yesterday. The waterway is a transit route for a fifth of the world’s crude.

Iran’s Revolutionary Guard Corps “successfully” fired several missiles, including long-range ones, in a military exercise that began yesterday, the official Islamic Republic News Agency said in a report published today.

Oil for August delivery climbed  to $88.04 a barrel on the New York Mercantile Exchange. Prices are 12 percent lower this year.

Brent for August settlement traded above $100 a barrel for the first time since June 11. The futures gained $3.32, or 3.4 percent, to $100.66 on the London-based ICE Futures Europe exchange.