Iran is the third-largest oil producer in the Organization of the Petroleum Exporting Countries (OPEC) and a key supplier, especially to refiners in Asia, reported Reuters.
The United States plans to impose new unilateral sanctions after abandoning an agreement reached in late 2015 which modifies Iran's nuclear ambitions in exchange for removing sanctions, which included curbs on crude oil exports.
New US sanctions will include measures aimed at its oil and shipping sectors, with a six-month 'wind down' period "to allow companies to end contracts, terminate business, (and) get their money out", according to the US State Department.
"President Trump is clearly articulating that he has minimal desire in an alternative agreement with Iran," said Ehsan Khoman, head of research for Middle East and North Africa at Mitsubishi UFJ Financial Group.
During the last round of sanctions, Iran's oil supplies fell by around one million barrels per day, but the country reemerged as a major oil exporter after sanctions were lifted in January 2016.
Since then, Iran ramped up supplies, producing 3.81 mbd in March 2018, almost four percent of global output. Its crude exports averaged over 2 mbd in January-March quarter this year.
South Korea's Ministry of Trade, Industry and Energy said it planned "to minimize the damage" to its companies, adding it would seek an exemption from sanctions. Japan may follow suit.
The biggest single buyer of Iran's crude is China, which imported about 900,000 bpd in mid-2016 but has scaled back shipments to around 600,000 bpd in 2018.
A senior official with a Chinese oil major, who declined to be identified because he is not authorized to speak to the media, said new sanctions would hurt Chinese refiners by pushing up the price of crude.
Benchmark Brent crude hit its highest since November 2014 on Wednesday at over $77 a barrel.
China's response to the US sanctions is unclear. Beijing has opposed the US move and many Chinese companies may continue to buy Iranian crude, analysts say.
In India, another major buyer of Iranian oil, refiners hope they can continue importing Iranian oil. During the last round of sanctions, India enjoyed waivers allowing limited Iranian oil imports paid for in rupees instead of US dollars.
"The impact (of new sanctions) in India will be there, but not so high," said R. Ramachandran, head of refineries at state-owned oil firm Bharat Petroleum Corp.
When sanctions were loosened against Tehran in 2016, India ramped up imports from Iran to almost 900,000 bpd in late 2016, but intake has fallen back to around 500,000 bpd this year.
The threat of new sanctions comes as demand in Asia, the world's biggest oil-consuming region, hit a record and producers, including Saudi Arabia and Russia restrict supply to prop up prices.
As a result, crude oil inventories in major developed nations have fallen sharply in the last year and a half to 2.85 billion barrels, only slightly above their five-year average.