The price of oil rises, closes above $131

Traders worry new Iran sanctions may escalate Middle East tensions

Oil prices rose Monday on a threat of new sanctions against Iran and as Tropical Storm Dolly headed into the Gulf of Mexico, prompting a hurricane watch for parts of Texas and Mexico.Light, sweet crude for August delivery added $2.16 to settle at $131.04 a barrel on the New York Mercantile Exchange. It was oil's first gain in a week.For drivers in the U.S., pump prices eased by a few pennies. A gallon of regular gasoline now sells for an average just shy of $4.07, according to auto club AAA, the Oil Price Information Service and Wright Express. Diesel prices also pulled back, to an average of $4.818 a gallon.

Retail prices may decline even more in the coming days as gas station operators catch up to last week's four-day oil sell-off, which left crude more than $18 below the trading record of $147.27 it hit on July 11.