Oil rose to a three-week high in New York as equities rebounded and tension grew between the West and Iran over the Persian Gulf nation’s nuclear program.

Oil climbed 0.3 percent after U.S. stocks moved higher, led by 3M Co. and General Electric Co., and European Union Energy Commissioner Guenther Oettinger signaled the bloc may have reached an agreement on banning oil imports from Iran, OPEC’s second-biggest crude producer. Prices retreated earlier as Standard & Poor’s said it may cut European credit ratings.

“There’s been a strong correlation between stocks and the oil market recently,” said Kyle Cooper, director of research for IAF Advisors in Houston. “Both oil and the stock market are waiting for signs of a resolution to the European debt crisis.”

Crude oil for January delivery rose 29 cents to $101.28 a barrel at on the New York Mercantile Exchange, the highest settlement since Nov. 16. Futures are up 11 percent this year.

Brent oil for January rose $1, or 0.8 percent, to $110.81 a barrel on the London-based ICE Futures Europe exchange.

3M rallied as much as 2.3 percent after saying revenue may increase 6 percent next year. General Electric rose as much as 3.4 percent as Sanford C. Bernstein & Co. raised its recommendation.

Oettinger Comments

When Oettinger was asked in Doha, Qatar, where he was attending the World Petroleum Congress, whether there was consensus within Europe for the ban he said “I think so, yes.” He didn’t specify when the EU would implement a ban.

The EU agreed to tighten sanctions on Iran at a Dec. 1 meeting in Brussels, blacklisting certain individuals and companies, while falling short of authorizing an immediate ban amid reservations from Greece. The U.S. approved additional curbs on Iran’s oil industry on Nov. 21.

“The statements from Oettinger are a signal that there will be a consensus to ban the import of Iranian oil imports,” said Phil Flynn, vice president of research at PFGBest in Chicago. “The Europeans might be waiting until the end of winter when demand eases.”

Oil fell in early trading after S&P said yesterday it may strip Germany and France of their AAA ratings as it weighs downgrades for 15 European countries depending on the result of a summit Dec. 9. The euro area’s six AAA rated countries are among nations to be placed on a negative outlook depending on the result of the summit, S&P said yesterday.

“All bets are off until the EU meeting at the end of the week,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut.

Downgrade Warning

German Finance Minister Wolfgang Schaeuble said S&P’s downgrade warning will spur European leaders to ratchet up efforts to resolve the two-year-old debt crisis in Brussels.

“A disappointing resolution to the big end of the week meeting in Brussels would probably give the market a leg down,” said Michael Wittner, the head of oil-market research at Societe Generale SA in New York.

The European Union accounted for 16 percent of global oil demand last year, according to BP Plc’s annual Statistical Review of World Energy. The U.S., the world’s biggest oil user, consumed 19.1 million barrels a day, or 21 percent of the total.

An Energy Department report tomorrow will probably show that U.S. crude oil stockpiles decreased by 1.25 million barrels last week, according to the median of 12 analysts surveyed by Bloomberg News. Inventories of distillate fuel, a category that includes heating oil and diesel, rose 1.15 million barrels, and gasoline supplies gained 875,000 barrels, the survey showed.

The industry-funded American Petroleum Institute will release its own supply data at 4:30 p.m. today in Washington.

Saudi Production

Saudi Arabia pumped more than 10 million barrels of oil a day last month, and is prepared to supply a similar amount this month if needed, said Ali al-Naimi, the country’s oil minister. The desert kingdom is the biggest and most influential member of the Organization of Petroleum Exporting Countries, which meets on Dec. 14 in Vienna to set output targets for early 2012.

Oil volume in electronic trading on the Nymex was 369,283 contracts as of 2:41 p.m. in New York. Volume totaled 452,704 contracts yesterday, 31 percent below the three-month average. Open interest was 1.33 million contracts.