Oil surges above $70 after State Dept orders crude buyers to cut Iranian imports to zero

Crude prices jumped on Tuesday after the U.S. State Department ordered companies to cut all of their oil imports coming from Iran to zero by November.

West Texas Intermediate futures for August delivery traded 3 percent higher at $70.19 per barrel, erasing earlier losses and breaking above $70 for the first time since May 25.

“The U.S. is continuing its decision to completely isolate Iran,” said Gene McGillian, vice president of market research at Tradition Energy. “They’re ringing the bell even louder. This isn’t unexpected. These people seem strident in what they want to do. What the effect is going to be is going to be the difficult thing to measure. It could point to more demand for U.S. oil.”

This announcement is the latest effort in the Trump administration’s maximum pressure campaign against Iran. In May, President Donald Trump withdrew the U.S. from the Iran nuclear deal. At the time, his administration gave foreign companies either 90 or 180 days to wind down their business with Iranian counterparts, depending on the type of commercial activity.

“It’s an attempt to crush the regime,” said John Kilduff, founding partner at Again Capital. “I’m seeing the companies, left right and center drop out from buying it.”

“Total and Shell have announced they’re not buying it anymore, starting now,” Kilduff said.

—CNBC’s Tom DiChristopher contributed to this report.

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