Oil prices rose more than 1 percent on Wednesday as markets braced for the imposition of US sanctions on Iran next week and as stock markets clawed back some of their recent losses.

Benchmark Brent crude oil was up 80 cents at $76.71 a barrel by 0840 GMT. The contract fell 1.8 percent on Tuesday, at one point touching its lowest since Aug. 24 at $75.09.

US light crude was up 60 cents at $66.78. It hit a two-month low of $65.33 a barrel on Tuesday.

New US sanctions on Iran begin on Nov. 4 and Washington has made it clear to Tehran's customers that it expects them to stop buying any Iranian crude oil from that date.

Imports of Iranian crude by major buyers in Asia hit a 32-month low in September, as China, South Korea and Japan sharply cut their purchases ahead of the sanctions on Tehran, government and ship-tracking data showed.

Oil market sentiment also received some support from equity markets, which pulled back from 20-month lows on Wednesday after pledges by China to support its markets.

“The bullish argument for crude still centres on Iran sanctions which are due to begin in November, and continued output declines from Venezuela,” said William O'Loughlin, investment analyst at Rivkin Securities.

Despite the rally on Wednesday, both crude benchmarks are around $10 below four-year highs reached on Oct. 3 and on track for their worst monthly performance since July 2016.

Tony Nunan, oil risk manager at Mitsubishi Corp in Tokyo, said the Brent price outlook for had changed dramatically:

“Everyone thought we were going to go into the $90s, but now we are heading for the $60s,” he said.

Oil has been caught in the global financial market slump this month, with equities under pressure from the trade war between the world's two largest economies, the United States and China.

The United States has already imposed tariffs on $250 billion worth of Chinese goods, and China has responded with retaliatory duties on $110 billion worth of US goods.