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SYDNEY (Bloomberg) -- Oil extended its rally after the U.S. said it was preparing new sanctions against Iran, further escalating tensions between the two states.

Futures in New York were up 0.5%, after surging 9.4% last week -- the biggest weekly gain in more than two years. U.S. Secretary of State Mike Pompeo said a “significant set of new sanctions” against Iran would come on Monday, although President Donald Trump said he was willing to negotiate with Iranian leaders with “no preconditions” to ensure the Islamic Republic never acquires a nuclear weapon.

It emerged Friday that Trump had aborted planned air strikes against Iran, citing concern that the death toll wouldn’t have been “proportionate” to Iran’s downing of an American spy drone earlier in the week. Trump said he was in “no hurry” to respond.