NEW YORK - Oil plunged Thursday, with U.S. crude dropping more than 3 percent as the market grappled with oversupply fears as increased U.S. sanctions on Iran had more incremental impact than expected and U.S. crude oil inventories rose sharply.
U.S. crude was down $2.24, or 3.5 percent at $61.35 per barrel by 11:34 a.m. EDT (1534 GMT), heading for its biggest weekly fall since February.
Brent crude futures fell $1.92, or 2.7 percent to $70.26.
The U.S. sanctions on Iran intensified as the Trump Administration halted waivers allowing eight countries including China and Turkey to continue to do business with Iran.
"You don't get a sense that China or Turkey are pulling back completely," said John Kilduff, a partner at Again Capital Management in New York. "A little bit of the angst in the market has come out here."
China has complained to the United States about its Iran sanctions and Turkey said it was unable to replace Iranian imports easily, calling on Washington to review its move.
Oil prices had previously been supported by the political crisis in Venezuela, stricter U.S. sanctions against Iran that halted waivers allowing countries to continue to buy oil from the country, and production cuts from the Organization of the Petroleum Exporting Countries.
The bullish sentiment also declined as robust U.S. crude stockpiles indicated that the market was well supplied.
Energy information supplier Genscape forecast that storage at the U.S. hub at Cushing, Oklahoma had increased 1.95 million barrels between April 26 and April 30, traders said.
U.S. crude stockpiles last week rose to their highest since September 2017, jumping by 9.9 million barrels to 470.6 million barrels as production hit a record high of 12.3 million barrels per day (bpd), government data showed.
"This comes as U.S. refineries head into the spring maintenance period, stoking fears that crude oil demand will be soft and stockpiles will continue to rise," ANZ bank said.
In Eastern Europe, countries have secured supplies to offset shipments halted due to contamination.
Poland's energy ministry said it had decided to release mandatory oil reserves following the suspension of contaminated oil deliveries from Russia in April, to secure regular output at local refineries.
Belarus said on Thursday that clean oil had reached it via the Druzhba pipeline from Russia.
The outage has helped push up North Sea crude differentials.
Despite the desire of many OPEC members to continue supply cuts, the group may eventually be forced into action to meet demand in a market that has seen prices rise more than 30 percent this year.
Russia has sent signals about potentially increasing output. In April, the country's oil output fell month-on-month, but stayed above OPEC quotas.
"OPEC is like a teabag; it works best in hot water ... The U.S. oil market might just be providing the producer group with the perfect excuse to extend the production agreement for at least another six months," PVM's Tamas Varga said.