SINGAPORE: Oil prices extended their gains on Wednesday, climbing more than one percent as markets responded to a fresh wave of US sanctions on Iran, a sharper-than-expected decline in US crude inventories, and a more conciliatory tone from US President Donald Trump on trade and monetary policy.
Brent crude futures rose by $1, or 1.5%, to reach $68.44 a barrel by 0640 GMT, while US West Texas Intermediate (WTI) crude climbed 99 cents, or 1.6%, to $64.66 a barrel. The gains followed Tuesday’s upward momentum, underpinned by tightening supply signals and shifting geopolitical developments.
The latest boost to prices came after the US Treasury announced new sanctions targeting Seyed Asadoollah Emamjomeh, an Iranian energy shipping magnate, and his affiliated corporate network, which has facilitated the movement of hundreds of millions of dollars’ worth of Iranian liquefied petroleum gas (LPG) and crude oil to global markets. The sanctions are viewed as a renewed attempt by Washington to curb Tehran’s energy exports, sparking concerns of further supply disruptions in an already volatile market.
“The US issued fresh sanctions targeting Iranian energy supplies, which worried markets,” said Priyanka Sachdeva, senior market analyst at Phillip Nova. She added that expectations of progress in US-China trade talks also supported benchmark prices.
Investor sentiment was further buoyed by a reported 4.6 million barrel drop in US crude oil inventories last week, according to preliminary data from the American Petroleum Institute. The decline far exceeded analysts’ expectations of an 800,000 barrel reduction, reinforcing optimism about resilient demand and tighter supply.
Oil markets also reacted to signs of a policy shift in Washington. President Trump, after weeks of criticism directed at the Federal Reserve, stepped back from his earlier threats to remove Fed Chair Jerome Powell and hinted at a less confrontational approach. He also suggested that tariffs on Chinese goods could be reduced significantly as part of a potential trade deal—though he clarified they would not fall to zero.
US Treasury Secretary Scott Bessent, speaking at a closed-door session during a JP Morgan investor conference, echoed a similar tone, stating that while negotiations with China had not yet begun, he expected a “slog” rather than a breakdown, indicating hopes for eventual de-escalation in trade tensions.
Crude prices have been under pressure in recent months due to fears that prolonged trade disputes between the US and China could dampen global economic growth and energy demand. However, the confluence of geopolitical developments, tightening inventory data, and a thaw in rhetoric has offered the market a near-term reprieve. Official US government data on oil stockpiles is expected later on Wednesday, with markets keenly watching for confirmation of the inventory draw.
