Oil Prices Rise Over 1% Amid U.S. Sanctions on Iran and Drop in Crude Inventories

Oil prices rose sharply on Wednesday morning, extending gains from the previous day as investors reacted to fresh U.S. sanctions on Iran, a decline in American crude inventories, and a more conciliatory tone from President Donald Trump on interest rates and trade tariffs.

Brent crude futures climbed by $1, or 1.5%, reaching $68.44 a barrel as of 9:40 a.m. Saudi time. U.S. West Texas Intermediate (WTI) crude also saw a rise of 99 cents, or 1.6%, trading at $64.66 a barrel.

The latest boost in prices comes in the wake of new U.S. sanctions targeting Iran’s energy sector. On Tuesday, Washington imposed penalties on Seyed Asadoollah Emamjomeh, an Iranian businessman accused of orchestrating a network responsible for transporting hundreds of millions of dollars’ worth of liquefied petroleum gas (LPG) and crude oil to overseas markets. The U.S. Treasury described the move as part of ongoing efforts to choke off Iran’s oil revenue.

“The US issued fresh sanctions targeting Iranian energy supplies, which worried markets,” said Priyanka Sachdeva, a senior market analyst at Phillip Nova. She added that expectations of progress in U.S.-China trade discussions also contributed to the positive sentiment.

Trump, who has recently criticized the Federal Reserve for not cutting interest rates, appeared to soften his stance on Tuesday. In remarks to reporters, he backed away from threats to remove Fed Chair Jerome Powell and indicated he would take a “nice” approach in trade talks with China. He also hinted at the possibility of reducing tariffs on Chinese goods, though he emphasized that they would not be eliminated entirely.

Investors were further encouraged by signs of tightening oil supply. According to data from the American Petroleum Institute (API) released Tuesday, U.S. crude inventories dropped by approximately 4.6 million barrels last week. Official figures from the U.S. Energy Information Administration are expected later today, with analysts forecasting a smaller decline of around 800,000 barrels, according to a Reuters poll.

U.S. Treasury Secretary Scott Bessent also offered cautious optimism, saying he expected a gradual de-escalation in trade tensions with China, though he warned that negotiations could be lengthy.

Oil markets have been sensitive to geopolitical developments and trade policy shifts, particularly as investors gauge their potential impact on global economic growth. The combined effect of supply concerns and a possible easing in trade tensions provided strong support for crude prices heading into the midweek session.