Aug. 7 (UPI) -- Sanctions on Iran and additional support from signs of declining oil inventories in the United States pushed the price of oil higher early Tuesday.
Iranian President Hassan Rouhani said he had support from the Europeans, China and Russia in regard to a U.N.-backed nuclear agreement that offers sanctions relief in exchange for peaceful commitments from Tehran. With U.S. sanctions snapping back on Tuesday, however, U.S. President Donald Trump said any company working with Iran would be isolated.
"Anyone doing business with Iran will not be doing business with the United States," he stated through his Twitter account.
Sanctions that went into force on Tuesday target Iran's access to the U.S. dollar, its trade in gold and other precious metals, and other financial measures tied to the national currency, the rial.
Joe McMonigle, a senior energy analyst at Hedgeye Risk Management, told UPI in response to emailed questions that it was clear the Trump administration was serious with its threat to isolate Iran economically.
"Oil sanctions are next (in November), and in our view, it would be a big mistake to expect waivers in the weeks ahead based on Trump's track record on Iran," he said.
That would potentially isolate as much as a million barrels of oil per day at a time when the market has little room for supply-side shocks.
"The U.S. sanctions against Iran apply to the purchase of U.S. dollars and might therefore already impact Iranian oil exports," added Giovanni Staunovo, a commodity analyst for UBS.
The price for Brent crude oil, the global benchmark, was up 1.22 percent as of 9:15 a.m. EDT to $74.65 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was up 0.8 percent to $69.56 per barrel.
Markets should move on Iran for most of the trading day. Overnight, the price of oil will move on data on U.S. crude oil and gasoline inventories from the American Petroleum Institute and on Wednesday on data from the U.S. Energy Information Administration.
A build in supplies would have a negative impact on the price of oil. A survey emailed to UPI from commodity group S&P Global Platts revealed expectations of a 3.7 million barrel drain on U.S. oil supplies and a 1.9 million barrel drain on gasoline.
Platts reported that an increase in U.S. crude oil supplies is in part behind the drain in inventories. While China hasn't taken on much U.S. crude because of trade tensions, the United States has been exporting more of its own oil to South Korea and Singapore.