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Oil prices climbed more than 1% on Wednesday, extending gains for a second consecutive session, as geopolitical tensions, tightening supply data, and a shift in tone from U.S. President Donald Trump lifted investor sentiment.
- Brent crude rose $1.00, or 1.5%, to $68.44 per barrel by 06:40 GMT
- West Texas Intermediate (WTI) gained $0.99, or 1.6%, to $64.66 per barrel
Fresh U.S. Sanctions on Iran Raise Supply Concerns
The gains were spurred in part by the U.S. Treasury’s new sanctions on Iranian oil and LPG exports. The U.S. blacklisted Seyed Asadoollah Emamjomeh and his affiliated network, which is accused of facilitating hundreds of millions of dollars in Iranian crude and LPG shipments to international markets.
These sanctions tighten the already constrained Iranian oil supply, reviving fears of a potential shortfall in global energy markets if geopolitical frictions escalate further.
Crude Inventories Fall Sharply, API Data Shows
In parallel, industry data released Tuesday by the American Petroleum Institute (API) showed a 4.6 million-barrel draw in U.S. crude inventories last week—far exceeding analysts’ expectations of an 800,000-barrel decline. The draw suggests stronger-than-expected demand or tightening supply.
Traders now await official U.S. government data from the Energy Information Administration (EIA), due at 10:30 a.m. ET (14:30 GMT) for confirmation.
Trump Calms Market with Softer Tone
Also fueling optimism:
- Trump backtracked on recent threats to fire Federal Reserve Chair Jerome Powell, which had previously unsettled markets.
- He hinted at reducing tariffs on Chinese imports, although clarified that tariffs would not drop to zero.
Trump’s softened rhetoric gave oil bulls more confidence that a U.S.-China trade deal may be in sight, potentially easing macroeconomic pressures and stimulating global demand.
Meanwhile, U.S. Treasury Secretary Scott Bessent said in a private meeting that while talks with China hadn’t started yet, a “de-escalation is likely”, even if progress remains slow.
Outlook
Oil markets remain sensitive to any developments in trade and geopolitical relations, especially between the U.S., China, and Iran. If the U.S.-China negotiations show tangible progress and sanctions on Iran escalate further, Brent and WTI could push toward $70 and $66 respectively in the near term.
Still, analysts warn that demand risks persist due to lingering trade uncertainty, potential central bank volatility, and fragile global growth. All eyes now turn to the EIA report for the next key market-moving catalyst.
