Oil Prices Rise Amid US Sanctions on Venezuelan, Iranian Crude

Oil prices edged higher on Wednesday as concerns over supply disruptions grew following the United States’ intensified efforts to restrict oil exports from Venezuela and Iran. A sharper-than-expected decline in U.S. crude inventories also contributed to the upward trend.

Brent crude futures rose by 20 cents, or 0.3%, reaching $73.22 a barrel as of 7:04 a.m. Saudi time, while U.S. West Texas Intermediate (WTI) crude climbed 20 cents, or 0.3%, to $69.20 a barrel. The gains follow a three-week high recorded in the previous trading session.

US Sanctions Drive Supply Worries

Market analysts pointed to U.S. sanctions as a key factor driving the bullish momentum in oil prices. “Crude oil prices maintain their bullish bias after Trump’s sanctions on Venezuelan oil, raising supply-side concerns,” noted Priyanka Sachdeva, a senior market analyst at Phillip Nova.

On Monday, former U.S. President Donald Trump signed an executive order under the 1977 International Emergency Economic Powers Act, allowing his administration to impose a 25% blanket tariff on imports from any country that purchases Venezuelan crude oil and liquid fuels.

Venezuela, which heavily relies on oil exports, has been significantly impacted by the move. China, its largest oil customer and already facing trade tariffs from the U.S., has temporarily stalled purchases of Venezuelan crude. Chinese traders and refiners have put transactions on hold, awaiting guidance from Beijing on whether to continue buying.

In a parallel development, the U.S. has also intensified sanctions on Iranian oil sales, targeting independent Chinese refiners. Washington imposed penalties on Shouguang Luqing Petrochemical, a “teapot” refinery in China’s Shandong province, and vessels involved in supplying Iranian crude to China—the primary buyer of Iranian oil.

US Crude Stockpiles Drop, Supporting Prices

Adding to the supply concerns, data from the American Petroleum Institute (API) indicated that U.S. crude inventories dropped by 4.6 million barrels last week, exceeding market expectations of a 1-million-barrel decline. This signals strong fuel demand in the world’s largest economy, further supporting oil prices.

Official data on U.S. crude stockpiles from the Energy Information Administration is set to be released later on Wednesday, which could further influence market sentiment.

Uncertainty Over Long-Term Price Trends

Despite the recent upswing, analysts remain cautious about oil prices maintaining their gains. Sachdeva from Phillip Nova noted that the potential for an economic slowdown, driven by Trump’s tariffs, could limit further price increases.

Adding to the complexity, geopolitical tensions appear to be easing slightly. The U.S. has brokered agreements with Ukraine and Russia to pause attacks at sea and on energy targets. As part of the deal, Washington has pledged to push for the lifting of certain sanctions against Moscow. However, both Kyiv and Moscow have expressed skepticism about each other’s commitment to the agreements.

With ongoing geopolitical shifts and economic uncertainty, oil prices are expected to remain volatile in the coming weeks.