Oil Prices Rise Amid U.S. Tariff Threats and Supply Concerns

Oil prices edged higher on Wednesday as supply concerns intensified, driven by:

• The U.S. threat of tariffs on countries purchasing Venezuelan crude
• A larger-than-expected drop in U.S. crude inventories

Market Performance:

• Brent Crude Futures: Up 49 cents (+0.67%) to $73.51 per barrel (by 09:50 GMT)
• West Texas Intermediate (WTI) Futures: Up 48 cents (+0.70%) to $69.48 per barrel

Both benchmarks hit their highest levels in three weeks during the previous session.

Key Drivers:

1. U.S. Tariffs on Venezuelan Oil Buyers

• Trade of Venezuelan crude to China stalled after Trump threatened tariffs on nations importing from Caracas.
• On Monday, Trump signed an executive order allowing 25% tariffs on imports from any country purchasing Venezuelan oil, under the 1977 International Emergency Economic Powers Act.
• China, a top buyer of Venezuelan crude, is already subject to U.S. import tariffs, raising uncertainty among Chinese refiners.

2. Iran Sanctions Further Tighten Supply

• The U.S. expanded sanctions on Iranian oil sales, targeting:
  • Shouguang Luqing Petrochemical, a Chinese independent refinery
  • Vessels supplying oil to China’s refineries, which remain the top buyers of Iranian crude
• These restrictions further limit global oil supply, supporting higher prices.

3. U.S. Crude Inventories Show Larger-Than-Expected Drop

• The American Petroleum Institute (API) reported a 4.6-million-barrel draw in U.S. crude stocks, indicating strong demand.
• Official U.S. government inventory data (EIA) is due later on Wednesday, which could provide further direction for oil prices.

4. U.S.-Russia-Ukraine Deal Eases Geopolitical Tensions

• Washington reached an agreement with Ukraine and Russia to pause attacks at sea and on energy infrastructure.
• As part of the deal, the U.S. agreed to push for lifting some sanctions against Moscow, which could limit further oil price gains.

Market Outlook:

Any relaxation in U.S.-Russia sanctions could ease supply constraints, potentially capping further price increases.

If U.S. crude inventories show another large draw, oil prices could extend gains.

Further developments on U.S. sanctions and tariffs—especially regarding China’s response—will be closely watched.