An expectation that China will increase financial stimulus led to a rise in the price of oil to a three-day high, as France advanced arguments for an embargo on Iranian oil. Meanwhile, Saudi Arabia said it would try to stabilize the price of oil at around $100.

Bloomberg reported that slow economic expansion in China was expected to lead to a relaxing of monetary policy by Beijing, and therefore to higher demand for oil. Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt, was quoted saying, “Everything is rising because of China. It’s general market sentiment.”

Expected higher demand from China, coupled with France’s efforts to restrict the length of a delay before an embargo on Iranian oil is enforced, caused crude prices to rise. February delivery prices for crude were up as high as $100.97 a barrel in electronic trading on the New York Mercantile Exchange; that was an increase of $2.27 from the Jan. 13 closing price. In late morning London trading, crude traded at $100.76. March Brent oil on the London-based ICE Futures Europe exchange gained as much 1.3% to $112.76 a barrel, with the European benchmark contract coming in at a premium of $11.52 to New York-traded West Texas Intermediate grade, also for March.

The European Union wants to delay for six months an embargo on Iranian oil so that member states can find alternative sources for oil. France, however, is pushing for no more than three months. The ban is supposed to be decided on at a meeting of EU ministers on Jan. 23, but there will probably be an exemption for Italy’s largest oil company, Eni.

David Lennox, an analyst at Fat Prophets in Sydney who forecasts U.S. crude will average $110 a barrel this year, was quoted saying, “The embargo story is certainly not going away. The Saudis came out and said they were looking to target oil at about $100 a barrel. I suspect that’s what the driver has been.”

According to Oil Minister Ali al-Naimi of Saudi Arabia, that country, the largest producer in the Organization of Petroleum Exporting Countries, can make up for any loss of crude output if sanctions are placed on Iran, and it intends to stabilize the average of crude prices worldwide at $100 a barrel in 2012. Iran is the second-largest producer and has threatened to seal off the Strait of Hormuz, conduit for about a fifth of the world’s oil supply, in retaliation for international sanctions placed on it over its nuclear policies.