Spot Brent crude oil futures were at $73.42 per barrel at 0653 GMT on Monday, up 21 cents, or 0.3 percent, from their last close.
Crude production declined 100,000 barrels per day to 10.8 million bpd in the week, according to the report.
From November, Washington will also target Iran's petroleum sector. Indian Oil is still awaiting direction from its government on Iranian crude imports, Sharma said.
Analysts at Capital Economics said Gulf economies are likely to raise oil output further over the rest of the year under the revised Opec deal, in part, to offset the impact of lower Iranian output.
The action, followed by another set of sanctions scheduled for November, will bring US sanctions against Iran to the level on par with those prior to a major multilateral nuclear deal reached in 2015.
Also, the oil markets have been squeezed by the escalating trade dispute between the United States of America and China. Tuesday's sanctions primarily hit Iran's ability to function in global financial markets.
The market was also bolstered by a report on Tuesday from the American Petroleum Institute, which said crude inventories fell by 6 million barrels in the week to August 3 to 407.2 million.
Iran's oil exports dropped by 7 percent to 2.32 million bpd in July-their lowest level in four months-as South Korea and Europe are slashing imports ahead of the return of the USA sanctions on Tehran, data from S&P Global Platts showed on Tuesday.
Tariffs working in trade war with China, says Trump
The U.S. tariffs, either in place or threatened, add up to nearly half of the value of goods it imported from China past year . This was in response to Trump administration's proposal of a 25 percent tariff on $200 billion worth of Chinese imports.
While the demand outlook was getting gloomier, supplies are likely to tighten with the introduction of US sanctions against Iran, which from November will also include oil exports.
Many energy analysts believe new sanctions will remove far less of Iran's barrels than the last time when about half its oil exports were erased from the market as a result of United States and European sanctions. Crucially to oil markets, however, crude has been dropped off the list.
Crude prices have dipped in recent weeks, reflecting less worry about supplies following increased output by Russian Federation and several OPEC nations, the IEA said in its latest monthly report about the global oil market.
Russia reacted to a US decision to impose fresh sanctions in response to the alleged use of a nerve agent against former Russian spy Sergei Skripal and his daughter Yulia in the British city of Salisbury in March. "We are going to work with individual countries on a case-by-case basis, but our goal is to reduce the amount of revenue and hard currency going into Iran", a senior USA administration official said on Monday.
Meanwhile, EIA reported surprising build of 2.9 million barrels of gasoline while the market's expectation was 1.1 million barrels of draw.
Some sources have said with exports falling, Iran's domestic refinery runs have increased, with a pick-up in gasoline output observed at some of its refineries, and more barrels are expected to go onto floating storage.
Prior to this deal, International Olympic Committee had struck deals for importing 10 million barrels from six cargoes in the spot market.