U.S. West Texas Intermediate (WTI) crude futures rose 67 cents to settle at $74.96 a barrel, a 0.90 percent gain.
Oil also dropped as investors focused on rising output from other producers, such as top exporter Saudi Arabia, to compensate for lower Iranian supplies.
Trump administration officials told the Free Beacon in June they are "not granting waivers" to some countries importing Iranian oil, but walked that statement back late Monday when a USA official disclosed it is now actively working to grant "individual countries" waivers from the new oil sanctions.
In May, Trump pulled the U.S. out of the Iran nuclear deal despite objection from the other signatories, the UK, Russia, Germany, China, and France, re-imposing sanctions lifted under the deal. Brent hit a four-year high of $86.74 last week.
While the IMF's cut in Iran's growth forecast was particularly dramatic, it also reduced its growth forecast for the Middle East region as a whole, citing the slump in the Iranian economy and increased energy costs due to soaring oil prices. Of the 220.4 million metric tonnes (million MT) of crude oil imported by India in 2017-18, about 9.4% was from Iran.
That is an 11 percent decline from August, but data from global oil shipments and storage service provider TankerTrackers.com puts the export volume north of 2 million bpd.
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International Olympic Committee and Mangalore Refinery and Petrochemicals Ltd (MRPL) together have placed order for 1.25 million tonne (MT) of crude oil from Iran.
Last week, India reduced gasoline and diesel prices to give relief to consumers against rising global crude prices caused by uncertainty over U.S. sanctions on Iran and OPEC's decision to raise output.
Strangely, the market has ignored the fact that total OPEC output last month was at its highest level this year; and also the fact that Russian Federation and Saudi Arabia had agreed informally to raise output in the coming months. US light crude was up 45 cents at $74.74.
US sanctions against Tehran are widely expected to have an immediate impact on Iran's oil exports, although the estimates of exactly how much of the country's oil could disappear from November 4 vary widely.
"Iranian barrels are declining fast, and Saudi Arabia's promise to balance will face a reality check in a month's time", JP Morgan analysts said in a note.
Meanwhile, oil companies operating in the Gulf of Mexico shut down almost 20 per cent of oil production as Hurricane Michael moved towards eastern Gulf states including Florida.
Several models call for the Hurricane to miss major producing assets in the Gulf, but any change of track could widen the impact. Late in the session, traders will get the opportunity to react to the latest data from the American Petroleum Institute.