Oil prices increased on Wednesday, building on the previous day's increases, as investors considered new U.S. sanctions on Iran, a decrease in U.S. crude inventories, and a gentler stance from President Donald Trump regarding the Federal Reserve. Brent crude futures increased by 55 cents, or 0.8 per cent, reaching $67.99 a barrel at 0400 GMT, while U.S. West Texas Intermediate crude rose by 54 cents, or 0.9 per cent, to $64.21 a barrel. On Tuesday, the U.S. announced fresh sanctions aimed at Iranian liquefied petroleum gas and crude oil shipping tycoon Seyed Asadoollah Emamjomeh and his business empire.
According to a statement from the U.S. Treasury, Emamjomeh's network is in charge of transporting hundreds of millions of dollars worth of Iranian LPG and crude oil to international markets. "The U.S. announced new sanctions aimed at Iranian energy resources, raising concerns in the markets," stated senior market analyst Priyanka Sachdeva at Phillip Nova. Sachdeva mentioned that this morning's benchmark prices were supported by optimism regarding a favourable outcome between the U.S. and China concerning import tariffs.
Oil rises on Iran sanctions
On Tuesday, Trump retreated from the idea of dismissing Fed Chair Jerome Powell following several days of escalating criticism regarding his failure to reduce interest rates. Trump indicated the potential for reduced tariffs on imports from China. In the meantime, U.S. crude oil stocks decreased by approximately 4.6 million barrels last week, market sources reported on Tuesday, referencing American Petroleum Institute data. Data from the U.S. government regarding oil stockpiles is expected at 10:30 a.m. ET (1430 GMT) on Wednesday. A Reuters survey indicated that analysts, on average, predicted a decrease of 800,000 barrels in U.S. crude oil inventories last week.
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On Tuesday, Trump informed reporters that he would approach negotiations with China in a "nice" manner and stated that tariffs would decrease considerably after a deal, although they wouldn't drop to zero. U.S. Treasury Secretary Scott Bessent expressed his belief that Sino-U.S. trade tensions will ease, although he noted that negotiations have not begun and are expected to be a "slog," according to a source who attended his private presentation to investors at a JP Morgan conference, as reported by Reuters. Trade tariffs have negatively impacted crude futures due to investors' worries about their ability to hinder global economic growth.
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