LONDON (Reuters) – Oil prices rose on Tuesday with revived U.S. sanctions against major crude exporter Iran expected to tighten global supply.
Brent crude oil futures were up 86 cents to $74.61 per barrel at 1052 GMT and U.S. West Texas Intermediate (WTI) crude futures were up 59 cents at $69.60 a barrel.
A first batch of U.S. sanctions against Iran, which shipped out almost 3 million barrels per day (bpd) of crude in July, officially came into effect at 12:01 a.m. U.S. Eastern time (0401 GMT) on Tuesday.
The reimposed sanctions target Iran’s U.S. dollar purchases, metals trading, coal, industrial software and its auto sector.
U.S. sanctions on Iran’s energy sector are set to be re-imposed after a 180-day “wind-down period” ending on Nov. 4.
“It is a reality check that this is happening and that Iran’s oil exports will be hurt when the oil sanctions hit it in November,” chief commodities analyst at Commerzbank Bjarne Schieldrop said.
President Donald Trump tweeted on Tuesday that the sanctions were “the most biting sanctions ever imposed”.
“Anyone doing business with Iran will NOT be doing business with the United States,” he added.
Many European countries, China and India, oppose the sanctions, but the U.S. government said it wants as many countries as possible to stop buying Iranian oil.
“We are going to work with individual countries on a case-by-case basis, but our goal is to reduce the amount of revenue and hard currency going into Iran,” a senior U.S. administration official said on Monday.
“A full embargo seems unlikely and the oil market should remain well balanced in light of rising production and the emerging markets’ fuel inflation pains,” Norbert Rucker, head of macro and commodity research at bank Julius Baer, said.