That has pushed oil prices higher and left some analysts saying they cannot rule out a rally to $100 a barrel. There are too many questions about how strictly the Trump administration will enforce the sanctions, how many oil importers will ignore the penalties, and how quickly a group of producers led by Saudi Arabia and Russia can turn on the taps.
"There's sort of a fever building in the market right now about what the landscape is going to look like in terms of supply and demand," said John Kilduff, founding partner of energy hedge fund Again Capital.
That fever will persist until the market determines how many Iranian barrels will come off the market and whether Saudi Arabia is able to step up to fill the gap, Kilduff said. He believes the uncertainty could push U.S. crude prices up another $10 a barrel to $85, until new supply potentially tamps down the cost early next year.
U.S. crude ended Wednesday's trading session at $76.41, climbing more than $1 a barrel to its highest since November 2014.
Oil prices rallied despite a large 8-million-barrel increase in U.S. crude stockpiles and confirmation of rising output from Saudi Arabia. Saudi Energy Minister Khalid al-Falih announced on Wednesday that the kingdom pumped 10.7 million barrels per day this month, near a national record, and will hike output again in November.
"I think the Saudis will ultimately step up, but they're going to be stingy at first," Kilduff told CNBC's "Squawk Box" on Wednesday. "It's going to be a rough winter for consumers at the gas pump, at the heating oil tank, the airlines. Everybody."
Saudi Arabia and OPEC have historically waited for supply shortages to develop before raising output, wary that a premature production hike could tip the market into oversupply. But that is cold comfort given the brisk decline in Iran's exports to date.
The drop has exceeded expectations, with Iranian exports down about 650,000 barrels a day since April, according to Goldman Sachs.
Jeff Currie, Goldman's global head of commodities research, said prices are rising because a lot of investors and oil consumers are buying oil contracts to hedge against the risk of a major supply disruption. At the same time, there aren't enough sellers in the market to relieve the upward pressure on prices.