Oil prices rallied on Wednesday after the United States imposed new sanctions on Iran’s energy sector in a new attempt to force the Islamic Republic to halt its nuclear energy program.
In London, the price of a barrel of European benchmark Brent closed at $116.73, up 21 cents from Tuesday.
New York’s main contract, West Texas Intermediate (WTI) for delivery in March, closed at $96.62 on the New York Mercantile Exchange.
“The main mover this morning was the new US sanctions,” said Rich Ilczyszyn at iiTrader.
“The market sold off pretty good this [Wednesday] morning and, on that story, came all the way back,” the analyst added.
On Wednesday, the US Treasury Department announced new sanctions targeting Iranian oil revenue. The sanctions prevent Iran from gaining access to earnings garnered from its crude exports.
The sanctions require the importing countries to keep their payments at home and only release them in return for purchases of goods from them by Iran, to effectively lock up Iranian oil revenue overseas.
Iran responded by condemning the measures as yet another act of hostility from the US government.
The US has spearheaded several rounds of Western sanctions against Iran in recent years, based on the unfounded accusation that Iran is pursuing non-civilian objectives in its nuclear energy program.
Iran rejects the allegations, arguing that as a committed signatory to the nuclear Non-Proliferation Treaty (NPT) and a member of the International Atomic Energy Agency (IAEA), it has the right to use nuclear technology for peaceful purposes.
In addition, the IAEA has conducted numerous inspections of Iran’s nuclear facilities but has never found any evidence showing that Iran’s civilian nuclear program has been diverted to nuclear weapons production.