Oil prices were trading higher on Tuesday amid expectations that US sanctions on major exporter Iran will tighten global supply.
Brent crude oil was up 1.7% at $74.8 per barrel, while West Texas Intermediate was up 1% at $69.6 a barrel.
It came as the first wave of US sanctions against Iran officially came into effect on Tuesday, with President Donald Trump ushering them in with a characteristic tweet.
He said: “The Iran sanctions have officially been cast. These are the most biting sanctions ever imposed, and in November they ratchet up to yet another level. Anyone doing business with Iran will NOT be doing business with the United States. I am asking for WORLD PEACE, nothing less!”
Iran’s President Hassan Rouhani described the measures as “psychological warfare” which aimed to “sow division among Iranians”.
Hussein Sayed, chief market strategist at FXTM, said: “Many investors were watching oil prices after the US reimposed sanctions on Iran.
“The US aims to bring Iranian oil exports to zero by November, but, given that China, India, and the EU are opposing these sanctions, it’s becoming a difficult guess as to how many barrels will be off the market by then.
“With global demand remaining healthy and the global heatwave increasing oil demand, I think prices will remain well-supported in the near term. However, a break above $80 needs a supply shock, but we are not there yet.”
More sanctions targeting Iran’s oil sector and Central Bank will come into effect in November.
Many countries, including US allies in Europe as well as China and India, oppose the sanctions, but the US government said it wants as many countries as possible to stop buying Iranian oil.
The US wants to reduce the amount of revenue and hard currency going into Iran.