Oil prices surged on Wednesday, hitting 3½-year highs, after U.S. President Trump abandoned a nuclear deal with Iran and announced the "highest level" of sanctions against the member of the Organization of the Petroleum Exporting Countries
Ignoring pleas by allies, Trump on Tuesday pulled out of an international nuclear deal with Iran that was agreed in late 2015, raising the risk of conflict in the Middle East and casting uncertainty over global oil supplies at a time when the crude market is already tight.
Brent crude oil touched its highest since November 2014 on Wednesday, up $2.19 a barrel, or 2.9% at $77.04 U.S. late in the morning session.
U.S. light crude was up $1.94 a barrel, or 2.8% at $71.00 U.S., after also hitting the highest intraday level since November 2014.
Futures briefly spiked to new highs after the U.S Energy Information Administration reported U.S. stockpiles of both crude oil and gasoline fell by 2.2 million barrels in the week through May 4.
Meanwhile, U.S. crude oil production rose to another high at 10.7 million barrels a day, according to EIA's preliminary weekly reading.
Iran re-emerged as a major oil exporter two years ago after international sanctions against it were lifted in return for curbs on its nuclear program, with its April exports standing above 2.6 million barrels per day.
That made Iran the third-biggest exporter of crude within OPEC, behind Saudi Arabia and Iraq.
Walking away from the deal means that the United States will likely re-impose sanctions against Iran after 180 days, unless some other agreement is reached before then.
