Oil prices continued to head south on Tuesday amid the further impact of policies by the administration of President Donald Trump of the United States.
Brent crude futures shed 24 cents or 0.32 per cent to trade at $75.93 per barrel and the US West Texas Intermediate (WTI) crude futures declined by 46 cents or 0.63 per cent to close at $72.70 a barrel.
Traders weighed President Trump’s latest move to exert maximum pressure push against Iran, warning that the Middle East nation cannot have a nuclear weapon.
He has accused former President Joe Biden of failing to enforce oil-export sanctions rigorously on Iran, therefore allowing the oil-producing country to sell oil to fund a nuclear weapons program and armed militias in the Middle East.
While Iran’s oil exports neared zero during his first term after reimposing sanctions, they rose under former President Biden’s tenure as Iran succeeded in evading sanctions.
Iran, the third-largest producer in the Organisation of the Petroleum Exporting Countries, extracts about 3.3 million barrels of oil per day, or around 3 per cent of global output.
Also, a new 10 per cent US tariffs on Chinese imports took effect on Tuesday, creating retaliatory tariffs by China.
On Monday, Mr Trump suspended his threat of steep tariffs on Mexico and Canada, agreeing to a 30-day pause in return for concessions on border and crime enforcement.
The ongoing trade tensions between the US and China may dampen demand for oil, further pressuring prices.
Market analysts noted that these actions are likely to give rise to a stronger US Dollar which will in turn weaken oil prices.
This is also coming as OPEC and its allies, known as OPEC+ are still on track to increase oil supply gradually from April.
Meanwhile, the American Petroleum Institute (API) estimated that crude oil inventories in the US rose by 5.025 million barrels for the week ending January 24.
For the week prior, the API reported a 2.86 million barrel build in US crude oil inventories, while gasoline inventories saw a hefty build for multiple weeks in a row.
In 2024, crude oil inventories in the US dropped by more than 12 million barrels, according to the API’s inventory data, with the downward trend continuing beyond the new year.
The official data from the US Energy Information Administration (EIA) will be released later on Wednesday.