Benchmark oil prices jumped over 2 percent on Tuesday and US crude topped $70 for the first time in two months, as Washington pushed allies to halt imports of Iranian crude. Brent crude gained $1.30 to trade at $76.03 a barrel by 2:17 p.m. EDT (1817 GMT). US light crude rose $2.08 to $70.16.
The United States is pushing countries to halt imports of Iranian oil from November, a senior State Department official said, and it will not grant any waivers to sanctions. "We're going to isolate streams of Iranian funding and looking to highlight the totality of Iran's malign behaviour across the region," the official told reporters.
US President Donald Trump in May said his administration was withdrawing from a 2015 deal between Iran and six world powers aimed at curbing Tehran's nuclear capabilities in exchange for the lifting of some sanctions. Demonstrators gathered for the second day in Tehran in protest of financial hardship and a weakening rial.
News that Saudi Arabia plans to pump up to 11 million barrels of oil in July, the most in its history, was outweighed by the renewed Iranian supply concerns, traders said. Iran's seaborne crude exports fell to about 1.93 million bpd in June from 2.38 million bpd in May and 2.58 million bpd in April, based on Thomson Reuters data.
"That would create an additional supply shortage, which is exacerbating the reduction of supply in Libya as well as the problems that we're seeing with Syncrude Canada," said Andrew Lipow, president of Lipow Oil Associates. Syncrude Canada's 360,000 barrel per day oil sands facility near Fort McMurray, Alberta will remain offline through July due to a power outage, a spokeswoman confirmed on Tuesday.
Traders expect the outage to reduce crude flows to Cushing, Oklahoma, the delivery point of the US crude futures contract. Meanwhile, Eastern Libyan commander Khalifa Haftar's forces have given control of oil ports to a separate National Oil Corporation (NOC) based in the country's east.
The official state-owned oil company will no longer be allowed to handle that oil, in a move the Tripoli government said would deepen division. These output losses follow a move by the Organization of the Petroleum Exporting Countries and other oil producers last week to increase supply by around 1 million barrels per day (bpd). "There is concern that the recent agreement by OPEC and non-OPEC producers will not be enough to satisfy oil demand," said Lipow.