And while the move by the government comes at a time when the sanctions against Iran have been renewed, the amount released is too small to compensate for the loss of oil from Iran. Saudi Arabia told Opec it cut supply in July, rather than increasing output as expected.
Concerns that an escalating trade war between China and the US could slow economic growth and weigh on crude purchases eased slightly after sources told Reuters that China's Unipec will resume purchases of USA crude oil in October, after a two-month halt due to the fight.
That notion has quickly taken a back seat to the familiar worry that market demand may actually wan due to the escalating trade war between the USA, and China, the latest development of which saw the imposition on Thursday of 25 percent tariffs on $16 billion worth of each other's goods; both countries have now imposed tariffs on a combined $100 billion of products since early July, and Washington still has a list of another $200 billion worth of Chinese imports that could face duties.
Thanks to these sanctions, Iran's exports could go down by as much as 1 million barrels of oil a day.
Oil prices rose 3%, with Brent crude futures hitting a three-week high.
Around one hour after the report was released, West Texas Intermediate (WTI) October delivery traded at 67.40 US dollars at New York Mercantile Exchange, up 1.56 dollars or 2.37 percent from its Tuesday settlement. The contract had already gone up by $0.52 to trade at $66.43 per barrel on Monday this week. Trading volume, however, is 50% below the 100-day moving average.
Brent crude, the global benchmark, rose $1.80, or 2.5%, to $74.43 US a barrel. The global benchmark crude traded at a $6.90 premium to WTI.
Signs of slowing U.S. crude output growth and a weaker United States dollar also provided some support to oil prices, said Kim Kwang-rae, commodity analyst at Samsung Futures in Seoul.
Crude stocks at the Cushing, Oklahoma delivery hub rose by 772,000 barrels.
On the geopolitical side of the equation, the trade war between the U.S. and China, the two largest economies in the world, is starting to weigh heavily on the energy sector. It came second to the US port district of Chicago, at 19 percent.