Oil prices rose more than 3 percent on Wednesday, hitting 3-1/2-year highs after U.S. President Trump abandoned a nuclear deal with Iran and announced the “highest level” of sanctions against the OPEC member. Ignoring pleas by allies, Trump on Tuesday pulled out of an international agreement with Iran that was agreed in late 2015, raising the risk of conflict in the Middle East and casting uncertainty over global oil supplies at a time when the crude market is already tight.
Brent crude oil touched its highest since November 2014 at $77.20 a barrel. The benchmark contract was up $1.80 a barrel, or 2.4 percent, at $76.65 by 1050 GMT.
U.S. light crude was up $1.70 a barrel, or almost 2.5 percent, at $70.76, near highs also last seen in late 2014.
In China, the biggest single buyer of Iranian oil, Shanghai crude futures hit their strongest in dollar terms since they were launched.
“Iran’s exports of oil to Asia and Europe will almost certainly decline later this year and into 2019 as some nations seek alternatives in order to avoid trouble with Washington and as sanctions start to bite,” said Sukrit Vijayakar, director of energy consultancy Trifecta.
Iran re-emerged as a major oil exporter in 2016 after international sanctions against it were lifted in return for curbs on its nuclear program, with its April exports standing above 2.6 million barrels per day (bpd).
That made Iran the third-biggest exporter of crude within the Organization of the Petroleum Exporting Countries, behind Saudi Arabia and Iraq.
