Oil prices rose following news the Trump administration is telling five nations, including allies Japan, South Korea and Turkey, they will no longer be exempt from U.S. sanctions if they import oil from Iran.
In morning trading, benchmark U.S. crude surged $1.52, or 2.4% to $65.57 per barrel in New York. Brent crude, used to price international oils, jumped $1.84, or 2.6% to $73.80.
Ritterbusch and Associates, an oil trading advisory firm, said in a morning note that "a complete elimination of Iranian exports is nearly impossible and that a reduction beyond current levels will likely prove limited."
It said that the overall effect "will hinge to a large degree on the Saudis response to what is likely to be some strong requests from the Trump administration to increase productions appreciably."
U.S. President Donald Trump said on Monday that Saudi Arabia and other OPEC nations could "more than make up" for any drop in Iranian oil supplies to global markets now that his administration has decided to end waivers that allowed some nations to buy Iranian oil without facing U.S. sanctions.
"Saudi Arabia and others in OPEC will more than make up the Oil Flow difference in our now Full Sanctions on Iranian Oil," Trump said on Twitter.
