Oil prices increased for a second consecutive day on Tuesday due to new U.S. sanctions on Iran, a major Middle Eastern oil producer. These sanctions raised concerns about potential supply tightness, while global refining margins remained strong.
Brent crude futures rose by 15 cents, or 0.2%, reaching $74.93 a barrel by 0724 GMT. Meanwhile, U.S. West Texas Intermediate crude futures climbed 23 cents, or 0.3%, to $70.93 a barrel. Both contracts had gained on Monday after experiencing a $2 drop the previous Friday.
“In the short term, I continue to think crude oil is looking for a base,” said IG market analyst Tony Sycamore. He added that the new U.S. sanctions on Iran would likely support this trend, along with the Iraqi oil minister’s commitment to reduce oversupply.
On Monday, the U.S. imposed new sanctions on over 30 brokers, tanker operators, and shipping companies involved in transporting Iranian oil. President Donald Trump aims to bring Iran’s crude exports down to zero.
According to a Reuters survey of OPEC output, Iran was the third-largest producer in the Organization of the Petroleum Exporting Countries, pumping 3.2 million barrels per day in January.
Fuel demand strength in the West is also supporting oil markets, according to some analysts.
“Globally complex refining margins are looking robust, with strong fuel oil and distillates crack, particularly in USGC and NEW benefiting from the heating oil demand from the cold snap,” noted Sparta Commodities analyst Neil Crosby. He was referring to the U.S. Gulf Coast and Northwest Europe.
In February, margins for a typical refinery in Singapore processing regional benchmark Dubai crude averaged $3.50 a barrel, compared to $2.30 a barrel last month, as shown by LSEG pricing data.
However, overall gains were limited by an uncertain demand outlook and a lack of fresh economic indicators from key consumer China.
Sources indicate that BP’s chief executive plans to abandon a target of increasing renewable generation twenty-fold by 2030 and will instead shift focus to returning profits.
“At this juncture, clear demand-side factors that can propel oil prices higher are still unknown until the middle of March,” said OANDA senior market analyst Kelvin Wong. He explained that this is when Chinese policymakers are expected to announce new stimulus policies and a 2025 growth target following the conclusion of the ‘Two Sessions.’
Meanwhile, U.S. President Donald Trump stated on Monday that tariffs against Canadian and Mexican imports, set to begin on March 4, are “on time and on schedule.” This is despite efforts by both trading partners to address Trump’s concerns regarding border security and fentanyl. Analysts believe that these tariffs would negatively impact global oil demand growth.
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