More than 12 hours after President Donald Trump announced the US would be pulling out of the nuclear deal with Iran and re-imposing sanctions on the country, the oil price has shot to its highest in more than three years. But the reaction in futures contracts was more subdued than in the spot market. The relatively mild response in what is known as the back of the oil curve may reflect uncertainty over how hard the sanctions will hit the world oil market later this year. A unilateral US crackdown on Iranian crude sales would reduce its exports, but the amount hinges on other countries’ willingness to comply.

Brent crude oil, the international benchmark, rose as high as 3.1 per cent to $77.20, in early ttrading in London on Wednesday while WTI, the US benchmark, jumped by a similar amount to $70.93. The US declared it would re-impose sanctions on Iran’s petroleum sales in early November, after a 180-day period allowing existing deals to be wound down. Addressing cameras in the White House Diplomatic Reception Room on Tuesday, Mr Trump said the US would be “instituting the highest level of economic sanction” on Iran. “Trump really went for the chokehold on this by reinstating all the sanctions that applied before the 2015 deal,” says Behnam Ben Taleblu, a research fellow at the Foundation for Defense of Democracies. “But because it has not got multinational buy-in, the US will find it a lot more challenging than under the old regime: it will be harder to implement the sanctions and will require more management and tinkering.”

Iran today exports about 2.5m barrels a day of oil. A previous round of international sanctions imposed on Iran in 2011-12 took a maximum of 1.4m b/d off world markets at their most effective. Those restrictions eased after 2015, when Iran reached a deal to curb its nuclear programme with the US, the UK, France, Germany, Russia and China.  The new round of US sanctions may be significantly less effective in blocking Iran’s oil exports, analysts say. The five other powers that signed the nuclear deal with Iran continue to back it.