Oil prices steadied on Tuesday afternoon, following a volatile session that saw U.S. crude top $75 a barrel for the first time since November 2014 before falling sharply and suddenly in mid-morning trading.

The American benchmark broke through the threshold as the market grew increasingly concerned about a shortage of oil amid supply disruptions in Libya and Canada and as tough U.S. sanctions on Iran loom.

"You're starting to hear talk of oil shock. There is little confidence in the market that we're going to escape an ever-tightening supply and demand balance now," said John Kilduff, founding partner at energy hedge fund Again Capital.

U.S. West Texas Intermediate crude rose to a session peak of $75.27 a barrel, the highest level since Nov. 25, 2014, and then tumbled to a low of $72.73. The contract ended Tuesday's session up 20 cents higher at $74.14.

Benchmark Brent crude oil was up 46 cents at $77.76, after topping out at $78.55 by 2:29 p.m. ET.

The oil market's early morning gains added to last week's rally, which saw WTI surge more than 8 percent and Brent rise about 5 percent. Those increases were fueled by a supply disruption at a major Canadian oil sands facility and concerns about Libya's crude exports.

Exacerbating those surprise events, a Trump administration official told reporters that American diplomats are pushing oil buyers to cut off all purchases of Iranian crude by the beginning of November. A senior State Department official reaffirmed the tougher-than-anticipated policy on Monday.

After oil prices turned lower, analysts pointed to a report from Saudi Arabia's state media agency saying the kingdom's Council of Ministers, chaired by King Salman bin Abdulaziz, is ready to deploy the nation's spare capacity to add more oil to the market. President Donald Trump has asked the king to raise output by as much as 2 million barrels per day.

OPEC, the Saudi-dominated group of 14 oil producers, reached an agreement with Russia and other exporters last month to raise output by about 1 million bpd.

The Organization of the Petroleum Exporting Countries pumped 32.32 million bpd in June, a Reuters survey showed, up 320,000 bpd from May. The June total is the highest since January 2018. The UAE's Abu Dhabi National Oil Co (ADNOC) said on Tuesday it could increase production by several hundred thousand barrels per day if needed.