The oil market appreciated by more than $1 per on Tuesday as new US sanctions against Iran sparked a recovery after previous selloffs.
During the trading day, Brent crude rose by $1.18 or 1.8 per cent to $67.44 per barrel and the US West Texas Intermediate (WTI) crude gained $1.23 or 2 per cent to close at $64.32 per barrel.
Brent and WTI fell more than 2 per cent on Monday as the US and Iran signalled progress in talks over the latter’s nuclear programme while President Donald Trump criticised the Federal Reserve Chair Jerome Powell.
However, the US issued fresh sanctions targeting an Iranian liquefied petroleum gas and crude oil shipping magnate and his corporate network.
The Treasury Department said that the new sanctions targets Iranian liquefied petroleum gas magnate Seyed Asadoollah Emamjomeh and his corporate network, amid ongoing talks with Tehran on its nuclear programme.
Mr Emamjomeh’s network is responsible for shipping hundreds of millions of dollars’ worth of Iranian LPG and crude oil to foreign markets, the US Treasury said in a statement.
Both products are a major source of revenue for Iran, helping to fund its nuclear and advanced conventional weapons programs as well as regional proxy groups including Hezbollah, Yemen’s Houthis and the Palestinian Hamas group.
Market analysts noted that despite progress in its talks with the US, failure to reach a deal could weigh heavily on Iran’s oil exports amid tightening US sanctions.
Iran and the US agreed on Saturday to begin drawing up a framework for a potential nuclear deal.
Still on its geopolitical issues, US Treasury Secretary Scott Bessent on Tuesday said that he believes trade tensions between the US and China will de-escalate.
The US beef with China and tariffs on virtually all US trading partners, have weighed heavily on oil prices in recent weeks as investors expressed concerns of a potential global economic slowdown that would severely erode oil demand.
The International Monetary Fund (IMF) on Tuesday slashed its economic outlook for this year to 2.8 per cent from 3.3 per cent.
Also, global finance chiefs swarmed Washington seeking deals with President Trump’s team to lower tariffs.
On the supply front, US crude oil inventories fell by nearly 4.6 million barrels last week, market sources said on Tuesday citing American Petroleum Institute (API) data.
Official data from the US Energy Information Agency (EIA) on stockpiles is due later on Wednesday.