Crude oil prices edged higher on Tuesday, amid rising concerns about global crude supply after U.S. reimposed sanctions on Iran. The first wave of sanctions against Iran came into effect at 12:01 this morning.
The move is likely to make a severe impact on global crude supply. More sanctions targeting Iran’s oil sector and Central Bank will come into effect in November.
A notable drop in Saudi Arabia’s crude output last month and supply disruptions in Venezuela and Libya hurt as well. Saudi Arabia reportedly pumped 10.3 million barrels per day (bpd) of crude in July, down about 200,000 bpd from a month earlier.
Crude oil futures for September delivery ended up $0.16, or 0.2% at $69.17 a barrel. On Monday, crude oil futures ended up $0.52, or 0.80%, at $69.01 a barrel.
Although many countries, including U.S. allies in Europe as well as China and India, oppose the sanctions, the U.S. government wants as many countries as possible to stop buying Iranian oil as it wants to reduce the amount of revenue and hard currency going into Iran .
Meanwhile, traders looked ahead to a report from The American Petroleum Institute on U.S. crude inventory, due this evening.
The Energy Information Administration is scheduled to release the data on U.S. crude stockpiles, at 10:30 AM ET on Wednesday.