A U.S. plan to impose targeted crude sanctions against Iran could significantly impact global supply and exhaust the world's spare oil capacity cushion, according to the latest monthly report from the International Energy Agency (IEA).
The IEA's closely watched report comes shortly after the re-introduction of U.S. sanctions against Iran, which from November will also include oil exports.
"As oil sanctions against Iran take effect, perhaps in combination with production problems elsewhere, maintaining global supply might be very challenging and would come at the expense of maintaining an adequate spare capacity cushion," the Paris-based organization said Friday.
"Thus, the market outlook could be far less calm at that point than it is today," the IEA added.
International benchmark Brent crude traded at around $71.43 on Friday morning, down around 0.9 percent, while U.S. West Texas Intermediate (WTI) stood at $66.40, off more than 0.6 percent.