Prices jumped 3 percent Wednesday after President Donald Trump said the USA would scrap a 2015 nuclear deal between Iran and world powers that had eased restrictions on the Islamic Republic's crude exports.
Benchmark Brent crude hit its highest since November 2014 on Wednesday at over $77 a barrel.
OPEC is in no hurry to decide whether to pump more oil to make up for an expected drop in exports from Iran after the imposition of new US sanctions, three sources familiar with the issue said, saying any loss in supply would take time.
South Korea's Ministry of Trade, Industry and Energy said it planned "to minimize the damage" to its companies, adding it would seek an exemption from sanctions.
Global oil prices skyrocketed on Wednesday after Donald Trump announced the withdrawal of the USA from the Iran nuclear deal. "Iranian is not the only crude", the manager told Reuters.
"If you accept the fact that after Tuesday's decision the general mantra was that the oil market will stay volatile, then here we are. price movement right now is pretty unpredictable", said PVM Oil Associates strategist Tamas Varga.
Since the sanctions were lifted in 2016, major European companies, partly wary of the remaining US sanctions on Iran, have been reluctant to do business with Tehran, which needs to attract over $100 billion in foreign investment to boost its crude output. "If the situation in the Middle East becomes more unstable, the market will become more concerned about how oil supply will be disrupted".
One factor that could partially mitigate any shortfall from Iran is soaring US oil output.
China and India, which together make up the majority of purchases of Iranian oil, are unlikely to curtail their Iranian oil imports - and may actually look to expand them.More news: Every New House Built In California Will Soon Have Solar Power
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Analysts' estimates of the possible reduction in Iranian crude supplies as a result of any new US sanctions range from 200,000 bpd to 1 million bpd.
China's response to the USA sanctions is unclear.
India, the second largest importer of Iranian oil, is unlikely to be immediately affected by USA sanctions. USA oil output reached another record high last week, hitting 10.7 million bpd.
Several refiners in Asia said they were seeking alternatives to Iranian supplies.
The threat of new sanctions comes as demand in Asia, the world's biggest oil-consuming region, hit a record and producers, including Saudi Arabia and Russian Federation restrict supply to prop up prices.
During the last round of sanctions, India enjoyed waivers allowing limited Iranian oil imports paid for in rupees instead of US dollars.
Italy's Eni also continues to buy Iranian oil and it is buying 2 million barrels of oil per month from Iran under a deal that expires at the end of the year.
Iran's exports are expected to decrease, as are foreign investments in the country.
Saudi Arabia said it would work with other producers to lessen the impact of any shortage in oil supplies. Any short-term spike in the oil price in response to the curtailment of Iranian imports is likely to provide higher revenues to actors like Russian Federation.