Oil prices closed higher by more than 1 per cent on Tuesday after the US imposed sanctions targeting Iran’s oil revenue stream while the market weighed the expected outcome of the meeting of the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) on Sunday.
During the session, Brent crude gained 99 cents or 1.45 per cent to trade at $69.14 a barrel, and the US West Texas Intermediate (WTI) crude appreciated by $1.58 or 2.47 per cent to $65.59 a barrel.
The US Treasury Department on Tuesday sanctioned a network of shipping companies and vessels led by an Iraqi-Kittitian businessman for smuggling Iranian oil disguised as Iraqi oil.
The Treasury said the network, run by a businessman who is a citizen of Iraq and St Kitts & Nevis and is based in the United Arab Emirates, operates primarily by covertly blending Iranian oil with Iraqi oil, which is then marketed intentionally as solely of Iraqi origin to avoid sanctions.
The administration of President Donald Trump is keeping pressure on Iran while nuclear talks have stalled. A sixth round of negotiations was suspended after the start of a 12-day war in June.
“By targeting Iran’s oil revenue stream, Treasury will further degrade the regime’s ability to carry out attacks against the United States and its allies,” Treasury Secretary Scott Bessent said in a statement, adding that, “We remain committed to an oil supply free from Iran and will continue our efforts to disrupt the ongoing attempts by Tehran to evade US sanctions.”
Meanwhile, investors will monitor a meeting of eight OPEC+ members on September 7, where analysts expect the group will not unwind remaining voluntary cuts.
Market analysts noted the group would not unwind the remaining voluntary cuts in place from the eight members, including Saudi Arabia and Russia, which were supporting the market and keeping prices in the $60 a barrel range.
For others, OPEC+ might wait for more data after the conclusion of the US summer driving season before it makes its next move.
Beyond OPEC+, there have been very few notable market developments as Brent continues to hover slightly above $69 per barrel, with the dearth of news caused by the US Labor Day holiday sapping the market’s risk appetite.