Oil prices edged up on Tuesday, continuing their recovery as sanctions raised concerns about Russian and Iranian oil supplies, with Brent futures gaining $1.13 or 1.5 per cent to settle at $77.00 a barrel and the US West Texas Intermediate (WTI) crude appreciating by $1.00 or 1.4 per cent to $73.32 per barrel.
US sanctions targeting tankers, producers and insurers have significantly disrupted shipments of Russian oil to leading importers China and India.
Reuters reported that Russian oil in its top buyer, China, has stalled as a wide price gap between buyers and sellers emerged in the Asian country after costs for chartering tankers unaffected by US sanctions jumped.
The US government under the administration of former President Joe Biden imposed fresh sanctions on January 10 targeting Russia’s oil supply chain.
This has caused tanker freight rates to soar as some buyers and ports in China and India steered clear of sanctioned ships.
Petroleum companies in China and India now expect the number of cargoes offered for March to drop from January and December figures because associated prices have surged, creating supply constraints.
Meanwhile, President Donald Trump restored his maximum pressure on Iranian oil exports last week, adding to supply worries.
The American President on Monday also raised tariffs on steel and aluminium imports to the United States to 25 per cent and has received condemnation from the European Union, Canada, and Mexico.
The possibility of renewed fighting in the oil-rich Middle East also led to prices gaining.
The Prime Minister of Israel, Mr Benjamin Netanyahu said that if Hamas does not release Israeli hostages by Saturday, he will end the ceasefire in Gaza.
This development followed a demand by President Trump on Monday for Hamas to release all hostages or he would propose cancelling the Israel-Hamas ceasefire.
The American Petroleum Institute (API) estimated that crude oil inventories in the US rose by a massive 9.043 million barrels for the week ending January 31.
Official data from the US Energy Information Administration (EIA) will be released later on Wednesday.