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United Bank for Africa

Oil prices steadied below 3-1/2 year highs on Monday as resistance emerged in Europe and Asia to U.S. sanctions against major crude exporter Iran, while rising U.S. drilling pointed to higher North American production.

Brent crude was up 20 cents at 77.32 dollars a barrel by 1315 GMT and U.S. light crude rose 10 cents to 70.80 dollars.

Both oil futures contracts hit their highest since November 2014 last week at 78 dollars and 71.89 dollars a barrel, respectively as markets anticipated a sharp fall in Iranian crude supply once U.S. sanctions bite later this year.

It is unclear how hard U.S. sanctions will hit Iran’s oil industry.

A lot will depend on how other major oil consumers respond to Washington’s action against Tehran, which will take effect in November.

China, France, Russia, Britain, Germany and Iran all remain in the nuclear accord that placed controls on Iran’s nuclear programme and led to a relaxation of economic sanctions against Iran and companies doing business there.

The surge in oil prices comes at a time of tight supply amid record Asian demand and voluntary output restraint by the Organisation of the Petroleum Exporting Countries and non-OPEC producers, including Russia.