Crude spikes as US ratchets up sanctions on key oil countries

Crude prices rose Tuesday morning after the US toughened its stance on Iran and Venezuela, key oil producers and OPEC members.

West Texas Intermediate rose as much as 2% to to $US72.72 per barrel. Brent, the international benchmark climbed 0.83% to $US80.11 a barrel around 8:45 a.m. ET. Both have shot to multi-year highs over the past few weeks.

US Secretary of State Mike Pompeo rolled out in a speech Monday a list of harsh demands that Iran must meet in order to avoid sanctions on the country. President Donald Trump earlier this month pulled the US out of the Iran nuclear deal, a move that reimposes harsh economic penalties on Tehran – including on oil.

The list included sweeping changes for the country, including ending all plutonium enrichment and withdrawing all military forces from Syria. Iranian President Hassan Rouhani reportedly already shot down the proposal, raising expectations for a dropoff in Iranian barrels.

Also on Monday, the US imposed further sanctions on Venezuela after it held a presidential election that is widely seen as fraudulent. While the sanctions focus on restricting the ability for US citizens to buy Venezuelan debt, it will almost certainly squeeze the country’s state-run oil industry, where output has already been falling.

WTI is up more than 42% over the year.

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