Oil Prices Rise on Iran Sanctions and Decline in US Crude Stocks

Summary

U.S. President Trump softens tone on China and Powell
Brent crude benchmark hits highest in almost three weeks
Official U.S. crude stocks data at 1430 GMT

(Reuters) – Oil prices rose on Wednesday after a fresh round of U.S. sanctions on Iran, a drop in U.S. crude stocks and a softer tone from U.S. President Donald Trump towards the Federal Reserve and his tariff war with China.

Brent crude futures hit their highest since April 4 at $68.65 a barrel and were up 54 cents, or 0.8%, at $67.98 by 1134 GMT. U.S. West Texas Intermediate crude rose 55 cents, or 0.9%, to $64.22.

Sending bullish signals on the supply side, the U.S. issued new sanctions targeting an Iranian shipping magnate whose network handles Iranian liquefied petroleum gas and crude oil worth hundreds of millions of dollars, the U.S. Treasury said.

Further price support came from U.S. crude oil inventories that fell by about 4.6 million barrels last week while gasoline stocks declined by 2.2 million barrels and distillate inventories dropped by 1.6 million barrels, market sources said, citing American Petroleum Institute data.

U.S. government data on oil stockpiles is due at 10:30 a.m. ET (1430 GMT) on Wednesday. U.S. crude oil stocks are expected to have declined by 800,000 barrels last week, a Reuters poll showed.

Stoking hopes of higher energy demand, Trump on Tuesday signalled the possibility of lower tariffs on Chinese imports. The Chinese foreign ministry said on Wednesday that the United States should stop making threats if it wants to make a deal.

Trump also backed away from the threat of firing Fed Chair Jerome Powell after days of criticising the Fed for not cutting interest rates.

Capping gains, the International Monetary Fund said on Tuesday that global economic output will slow as Trump’s steep tariffs on virtually all trading partners begin to bite.