Brent crude increased 70 cents to $111.68 a barrel by 0915 GMT, just below its 200-day moving average of $111.77, a source of technical resistance. U.S. crude gained 51 cents to $98.99 a barrel.
Measures to a new package of sanctions that would single out Iran's national oil and shipping companies and restrict its ability to tap into electronic banking services are currently being considered by leading U.S. lawmakers.
"The tension is keeping a floor under prices, and ongoing signs that China is not going to have a hard landing is giving support to the black stuff," said Michael Hewson, analyst at CMC Markets.
President Barack Obama has signed into law, new sanctions on transactions involving Iran's central bank, while the European Union last week imposed a ban on the import, purchase or transport of Iranian oil. The United States sanctions are the harshest so far on Iran.
There are still concerns over supply demands as disputes between Sudan and South Sudan on oil transit fees dragged on. The newly independent South Sudan has shut production estimated at 350,000 barrels per day (bpd).
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