Oil prices rose on Tuesday as the U.S. reintroduced sanctions against major crude exporter, Iran, tightening global markets.
Meanwhile, heatwave across Europe and other areas pushes oil up.
Sweet Brent crude oil futures were at 74.08 dollars per barrel.
U.S. West Texas Intermediate (WTI) crude futures were up at 69.21 dollars a barrel.
The U.S. sanctions against Iran, which shipped out almost three million barrels per day (bpd) of crude in July, officially came into effect at 12.01 a.m. U.S. Eastern time (04.01 GMT) on Tuesday.
Many countries, including U.S. allies in Europe as well as China and India, oppose the sanctions, but the U.S. government said it wants as many countries as possible to stop buying Iranian oil.
“It is our policy to get as many countries to zero as quickly as possible.
“’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,” said a senior U.S. administration official on Monday.
French bank Societe Generale said there was currently a “comfortable supply” in physical crude markets, but noted, “Iran sanctions will take another one million bpd off the markets.”
This would leave markets with a little spare capacity to deal with unforeseen disruptions, it said.
Some analysts warned that a global heat wave could also now affect oil demand.
Much of the northern hemisphere has been gripped by extreme heat this summer, pushing up demand for industrial and residential cooling.
This mostly impacts demand for power fuels such as thermal coal and natural gas.