Investing.com - WTI crude oil prices settled higher Tuesday after the United States renewed financial sanctions against Iran while expectations for a slowdown in the pace of U.S. output also lifted sentiment.
On the New York Mercantile Exchange crude futures for September delivery gained 16 cents to settle at at $69.17 a barrel, while on London's Intercontinental Exchange, Brent rose 1.10% to trade at $74.57 barrel.
The financial sanctions, which got underway at 12:01 AM ET (04:01 GMT) Tuesday, aim to curb Iran's purchases of both U.S. dollars and metals including gold, its automotive sector and its ability to raise funds by through sovereign debt issuance.
Investor expectations that the United States would maintain its tough stance on Iran were further strengthened after Iranian President Hassan Rouhani dismissed President Donald Trump's recent offer for direct talks.
"Trump's call for direct talks is only for domestic consumption in America ahead of elections" ... and "to create chaos in Iran," Rouhani said on Tuesday.
Following the re-imposition of sanctions on Iran, Trump issued a strong warning against anyone trading with Iran.
"Anyone doing business with Iran will not be doing business with the United States," Trump warned in a tweet.
The next wave of sanctions - due about three months from now on Nov. 4 - are expected to cripple the country's exports infrastructure and oil exports.
Analysts estimated Iranian output could drop to as much as 2.7 million barrels a day (bpd) by the end of the year, raising the risk of a global supply shortage, underpinning oil prices.
Oil prices were also boosted by a report from the Energy Information Administration (EIA) on Tuesday, estimating domestic oil production will grow at a slower rate than previously forecast.
The EIA cut its 2018 U.S. crude output estimate to 10.68 million bpd from 10.79 million bpd and its 2019 output estimate to 11.7 million bpd from 11.8 million bpd, citing lower crude prices are expected to curb U.S. shale oil output.
“We continue to expect Brent crude oil spot prices to fall towards $70 per barrel by the end of 2018, as the market appears to be fairly balanced in the coming months,” said Linda Capuano, EIA Administrator.