Oil surges after state department orders buyers to cut Iranian imports

"The United States is continuing its decision to completely isolate Iran," said Gene McGillian, vice president of market research at Tradition Energy. "They sound louder".

President Donald Trump withdrew the United States from the Iranian nuclear deal and reinstated extensive sanctions against the Middle East country in May, but the administration has not set a timetable for a complete reduction of imports of Iranian crude.

Market watchers wondered if Trump would follow the Obama model, which called for foreign companies to cut their purchases by 20% every 180 days. But the state department said on Tuesday that Trump is expecting buyers to fully liquidate these purchases by Nov. 4.

"It's not unexpected, these people seem strident in what they want to do," said McGillian. "What the effect is going to be will be the hard thing to measure, that could indicate a greater demand for American oil."

Iran, third largest producer of OPEC, exports more than 2 million barrels a day.

John Kilduff, founding partner of the venture capital fund Again Capital, said Trump's decision seemed calibrated to crush the Iranian regime, which lasted for nearly 40 years of US pressure.

"I see companies, who are left and center, giving up the idea of ​​buying it," Kilduff said. "Total and Shell have announced that they are no longer buying it, from now on."