The analysts say in a report Tuesday that U.S. ally Saudi Arabia will take its time to ramp up oil production to make up for the lost Iranian oil exports. U.S. President Donald Trump announced sanctions last year, but then gave countries waivers to keep importing from Iran. The waiver announcement upset key oil producing countries in the OPEC cartel after they had increased supply in expectation of lower Iranian exports.
The analyst wrote that the Saudis, along with Kuwait and the United Arab Emirates, "will likely be much more wary about increasing production in advance of clear evidence that Iranian supply is falling."
The European Union is criticizing the U.S. decision to impose sanctions on countries that buy Iranian oil and warns that the move could damage an international effort to stop Iran developing nuclear weapons.
European Commission spokeswoman Maja Kocijancic expressed "regret" Tuesday over the U.S. decision and that it "risks further undermining" the Iran nuclear deal.
U.S. President Donald Trump pulled out of that pact last year, saying it does nothing to stop Tehran developing missiles or destabilizing the Middle East.
Since then, the EU has put measures in place to side-step U.S. sanctions on Iran, including a way to keep financial supply lines to Tehran open and protect European businesses operating there.
Global oil prices are climbing in the wake of the U.S. move to impose sanctions on countries that buy Iranian oil.
And analysts said Tuesday that prices could keep heading higher.
The U.S. announced the sanctions last year to push Iranian leaders to renegotiate an agreement aimed at keeping them from developing nuclear weapons. But some countries got temporary waivers that allowed them to import Iranian oil. The U.S. now says those waivers expire May 2.
Among those affected are China, India, Japan, South Korea and Turkey. U.S. Secretary of State Mike Pompeo said Monday the U.S. is counting on ally Saudi Arabia to ensure sufficient supply.
New York Mercantile Exchange rose 10 cents to $65.65 per barrel while international Brent crude rose 14 cents to $74.18 per barrel.