Oil prices rise as United States renews sanctions against Iran

Oil Tanker in Iran

Starting in July, South Korea is halting Iranian oil imports for the first time since 2012 amid pressure from the United States to discontinue purchases from Iran.

Oil prices rose on Tuesday as the US reintroduced sanctions against major crude exporter, Iran, tightening global markets.

Donald Trump described the new sanctions as "biting" and warned other countries not to do business with Iran in a post on Twitter today.

In other news, USA drillers cut two oil rigs in the week to August 3, bringing the total count down to 859, General Electric's Baker Hughes energy services firm said on Friday.

"It certainly is a reminder to everyone that the U.S.is serious about sanctions, and it's doubtful they will grant waivers", said John Kilduff, partner at Again Capital Management in NY.

The price for Brent crude oil, the global benchmark, was up 1.22 percent as of 9:15 a.m. EDT to $74.65 per barrel.

At 0244 GMT, September WTI crude oil futures are trading $68.81, up $0.32 or +0.47% and October Brent crude oil is at $73.58, up $0.37 or +0.51%.

Oil prices rose after the sanctions went into affect, but gains were limited as market participants lacked clear signs on just how much the proposed oil sanctions would affect Iranian crude output, Kilduff said.

Exports to China rose to 799,452 bpd in July from 722,100 bpd in June, while Iranian oil sales to India increased by more than 40,000 bpd from June to 706,452 bpd in July, S&P Global Platts data shows.

"The market continues to price in geopolitical risk from the reimposition of sanctions by the US on Iran", said Gene McGillian, vice president of market research at Tradition Energy in Stamford, Connecticut.

Oil rose on Monday after Saudi crude production unexpectedly fell in July and U.S. drilling appeared to slow, although the price is still nearly 10 percent below its 2018 high of more than $80 a barrel.

That came despite a pledge by the Saudis and top producer Russian Federation in June to raise output from July, with Saudi Arabia promising a "measurable" supply boost. Overnight, the price of oil will move on data on U.S. crude oil and gasoline inventories from the American Petroleum Institute and on Wednesday on data from the U.S. Energy Information Administration.

"The price may also be finding support from oil transport infrastructural problems in the USA", said Commerzbank analysts in a note".

Also supporting prices were a weakened dollar, McGillian said.

US crude stockpiles were expected to have dropped 3.3 million barrels last week.

Still, with Russian Federation, the United States and Saudi Arabia now all producing 10 million to 11 million bpd of crude, just three countries now meet around a third of global oil demand.

This mostly impacts demand for power fuels such as thermal coal and natural gas.

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