Oil prices surged on Tuesday, gaining more than $1 per barrel, as new U.S. sanctions on Iran and a rebound in equity markets sparked a recovery from the previous session’s sharp decline.
Brent crude futures rose by $1.18, or 1.8%, closing at $67.44 per barrel. The U.S. West Texas Intermediate (WTI) crude contract for May, which expired on Tuesday, gained $1.23, or 2%, settling at $64.32. The more actively traded WTI June contract also saw a 2% increase, ending at $63.47.
Both Brent and WTI had dropped over 2% on Monday after the U.S. and Iran signaled progress in discussions regarding Iran’s nuclear program. The fall in prices was also fueled by a sharp selloff in stock markets following President Donald Trump’s criticism of Federal Reserve Chairman Jerome Powell.
On Tuesday, the U.S. imposed new sanctions targeting an Iranian oil magnate and his corporate network, which further supported oil prices. John Kilduff, partner at Again Capital in New York, noted that while talks with the U.S. could lead to an agreement, failure to reach a deal could severely impact Iran’s oil exports due to tightening U.S. sanctions. “Either a nuclear deal is reached, or the U.S. will aim to drive Iran’s oil flows to zero, and it seems more likely that we’ll see a zero-flow scenario,” Kilduff said.
Equity markets also saw a recovery on Tuesday, spurred by hopes of easing U.S.-China trade tensions. U.S. Treasury Secretary Scott Bessent expressed optimism, stating that he believed the trade conflict between the two countries would de-escalate, though he acknowledged that talks with China had not yet begun and would be challenging.
The trade dispute between Washington and Beijing, along with tariffs imposed on many U.S. trading partners, has weighed on oil prices in recent weeks, as concerns grow over a potential global economic slowdown that could reduce oil demand. The International Monetary Fund (IMF) downgraded its economic outlook for the year on Tuesday, while global finance ministers sought deals with the Trump administration to lower tariffs.
Marcus McGregor, head of commodities research at asset management firm Conning, warned that U.S. tariffs could slow global trade, disrupt supply chains, and raise costs across energy-consuming industries, all of which could dampen oil demand.
On the supply side, U.S. crude oil inventories decreased by nearly 4.6 million barrels last week, according to data from the American Petroleum Institute. Official U.S. government data on stockpiles will be released at 10:30 a.m. ET (1430 GMT) on Wednesday. Analysts expect, on average, a decline of 800,000 barrels in U.S. crude oil stocks for the week.
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