Analysts fear Saudi retaliation would cause supply shock, sending oil prices up.
Oil is also under pressure from rising output by the world's biggest producers, Russia, the U.S. and Saudi Arabia, which are helping to replenish global oil inventories after more than a year of stock draws.
A list of all countries getting US waivers allowing them to import Iranian oil is expected to be released officially on Monday, industry sources say. WTI lost 2.93 US dollars to settle at 66.43 dollars a barrel, and Brent sank 3.39 dollars to 76.44 dollars per barrel. "What this means in the near-term is that the USA may double production, double export capacity and introduce new market innovations", Fannon said. Saudi Arabia and Russian Federation have said they will pump enough to meet demand once United States sanctions are imposed.
She wrote, "Not only will the exemptions keep some important US allies happy, but by keeping more Iranian oil on the market than previously expected, the administration helps prevent oil prices from rising too high, so American consumers do not suffer from price shock".
The WTI is likely to stay bearish below $67.25 to target $66.
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The US also sued to stop the companies from exporting to America any products that were created using the trade secrets. The offshore yuan jumped 0.83 percent to 6.8601.
At the same time, gasoline held in storage fell by 3.2 million barrels and distillate fuel inventories - including diesel and heating fuel - dropped by 4.1 million barrels.
Futures on Brent crude for delivery in December rose in price up to 76,39 dollars per barrel. While it is unclear to what extent the impact will have on global oil markets, it could pave a path for a rebound in oil prices toward the $75-per-barrel level by the end of the year.
Oil is approaching a bear market with prices falling about 16 percent from a four-year high in October as a rout in global equity markets and U.S. EIA also forecast that total global liquid fuels inventories to decrease by 200,000 barrels per day in 2018, followed by an increase of 280,000 barrels per day in 2019.
"In theory, we could have been in a bullish market because of sanctions against Iran".
Both the equity and crude markets are bedeviled by a slowdown in global economic growth, rising USA interest rates and worries about a prolonged trade dispute between the United States and China.