Spot Brent crude oil futures were at $74.08 per barrel at 0624 GMT on Tuesday, up 33 cents, or 0.4 percent, from their last close.
The action, followed by another set of sanctions scheduled for November, will bring US sanctions against Iran to the level on par with those prior to a major multilateral nuclear deal reached in 2015. However, they were still among the lowest this year because of a drop-off in demand from the country's smaller independent, so-called "teapot" refineries. West Texas Intermediate, the USA benchmark for the price of oil, was up 0.06 percent to $66.89 per barrel. We will monitor this week's figures for another increase in inventory levels which could see oil prices move lower.
The tariffs by China on US crude imports have shaken up the markets. As retaliation against Washington, China will impose tariffs of 25 percent on a further $16 billion in USA imports ranging from fuel and steel products to autos and medical equipment.
Last week, a news report said Chinese officials has rejected United States requests to cut imports of Iranian oil but added that China's imports might not rise further than current levels.
Iran is the third-largest producer in the Organization of the Petroleum Exporting Countries.
Earlier on Wednesday, government data showed China's imports of crude oil in July rose slightly after falling in the previous two months.
U.S. West Texas Intermediate (WTI) crude futures were up 19 cents, or 0.3 percent, at $68.68 barrel. Brent crude, the standard for global oil prices, fell 18 cents to $72.10 per barrel in London. "Crude oil and refined products affected by additional duties will reduce their competitiveness in the Chinese market".
Analysts have predicted the sanctions could put more than two million barrels per day at risk.
Many European countries, China and India, oppose the sanctions, but the USA government said it wants as many countries as possible to stop buying Iranian oil.
Analysts expect Iranian exports to drop by anything between 500,000 and 1 million b/d after full USA sanctions are re-imposed on November 5.
"Past instances of El Nino have resulted in sharp drops in United States residential and commercial heating oil demand and prices", it said.
Traders were also scrutinizing weekly data on USA crude stockpiles, which showed inventories fell by 1.4 million barrels in the week through August 3.
Many energy analysts believe new sanctions will remove far less of Iran's barrels than the last time when about half its oil exports were erased from the market as a result of U.S. and European sanctions.