On Monday, the Trump administration said it would no longer exempt any countries from U.S. sanctions if they continue to buy Iranian oil. The administration had granted eight waivers when it re-imposed sanctions on Iran in November. These expire May 2.
The move will choke off more than $50 billion of annual Iranian income, which the U.S. says funds destabilizing activity in the Middle East and beyond. China, India, Japan and South Korea and Turkey are major importers of Iranian oil.
Industry experts said the sanctions could potentially remove up to 1.2 million barrels of oil per day from international markets. But that number will likely be lower, depending on how countries respond and just how much oil Iran continues to export
The decision has already been criticized by the European Union. European Commission spokeswoman Maja Kocijancic expressed "regret" Tuesday over the U.S. decision, saying that it "risks further undermining" the Iran nuclear deal.
In the markets, the move gave oil prices a further lift.
A barrel of benchmark New York oil was up 0.7% at $65.99, slightly below its earlier high since October of $66.10. Meanwhile, Brent, the international standard, was 0.3% higher at $74.25 a barrel, slightly down on its earlier highest level since November of $74.65.
"There isn't much doubt about the trigger for the latest rally, with Trump's decision not to extend waivers on imports of Iranian oil beyond May unsurprisingly providing further upward pressure," said Craig Erlam, senior market analyst at OANDA.
The oil price advance has helped shore up oil stocks. London-listed BP was up 2.4% while France's Total rose 1.9%.
However, markets in Europe reopened after the Easter holiday on a flat note. France's CAC 40 was down 0.2% to 5,570 while Germany's DAX was 0.2% lower at 12,196. Britain's FTSE 100 was up 0.4% at 7,491.
Wall Street was set for a steady open with Dow futures up 0.1% but the broader S&P 500 futures down 0.1%.
Traders are waiting for a slew of U.S. earnings reports from big companies such as Twitter, Facebook and Microsoft starting Tuesday.
There was no strong impetus for buying in Asia. Reports from a recent high-level meeting in China, which was chaired by President Xi Jinping, showed willingness to fine-tune monetary policy but raised questions about future government stimulus.
Japan's Nikkei 225 index was 0.2% higher at 22,259.74 and the Kospi in South Korea added 0.2% to 2,220.51. Hong Kong's Hang Seng was flat at 29,963.24. Australia's S&P ASX 200 gained 1% to 6,319.40 while the Shanghai Composite gave up 0.5% to 3,198.59.
Elsewhere, the euro was flat at $1.1250 while the dollar was steady at 112 yen.
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