WTI Crude Oil prices settled higher Monday as the White House confirmed it would enforce financials sanctions on Iran, renewing investor expectations for steep losses of Iranian crude from the market.
On the New York Mercantile Exchange crude futures for September delivery rose 0.77% to settle at $69.02 a barrel, while on London's Intercontinental Exchange, Brent rose 0.76% to trade at $73.77 barrel.
The rise in oil prices emerged as investors renewed bets on steep losses of Iranian crude from the market after Washington confirmed Monday financials sanctions on Iran would come into effect Tuesday at 12:01 a.m. ET (04:00 GMT).
The sanctions, which pale in comparison to the second round of sanctions slated for early November, aim to curb Iran's purchases of U.S. dollars, its trade in Gold and other precious metals, and its buying of coal and industrial-related software.
After pulling the United States out of the Iran nuclear agreement in May, President Donald Trump gave banks 90 days to prepare for some sanctions to snap back into place.
The second round of sanctions, due three months from now, are expected to cripple Iran's energy infrastructure and oil exports, raising the risk of a global supply shortage, underpinning oil prices.
Morgan Stanley said it expected Iranian output to drop to 2.7 million barrels a day (bpd) by the fourth quarter, with more than 1 million barrels taken offline.
Expectations for steep losses of Iranian crude from the market had waned somewhat in recent weeks after the Trump offered to meet with his Iranian counterpart Hassan Rouhani, while U.S. Treasury Secretary Steve Mnuchin said the United States would consider waivers for certain countries importing Iranian crude.
Oil prices made a bright start to the session as bulls cheered a drop in Saudi output and signs of tightening U.S. output.
Oilfield services firm Baker Hughes reported on Friday that the number of U.S. oil drilling rigs in operation fell by 2 to 861.
Saudi Arabia, meanwhile, pumped around 10.29 million barrels per day (bpd) of crude in July, Reuters reported Friday, citing two OPEC sources, down about 200,000 bpd from a month earlier.
The fall is Saudi output arrived despite OPEC and non-OPEC members agreeing in June to ease oil production limits, which had been imposed as part of the production-cut agreement struck in November 2016.