HOUSTON: Oil prices rose more than $1 a barrel on Wednesday after Washington issued new sanctions targeting Chinese importers of Iranian oil.
Brent crude futures rose $1.08, or 1.67%, to $65.75 a barrel by 11:43 a.m. EDT (1543 GMT) while U.S. West Texas Intermediate crude rose $1.14, or 1.86%, to $62.47.
The U.S. on Wednesday issued new sanctions targeting Iran’s oil exports, including against a China-based “teapot refinery”, as President Donald Trump seeks to ramp up pressure on Tehran, and drive Iranian oil exports down to zero.
The action comes as the U.S. government has relaunched negotiations with Iran over its nuclear programme this month with talks in Oman last weekend and a second round expected in Rome this weekend.
Meanwhile, Iran’s right to enrich uranium is not negotiable, Foreign Minister Abbas Araqchi said on Wednesday ahead of the Rome talks.
A Bloomberg report quoted an anonymous source as saying that China wants more respect from the Trump administration before it will agree to talks, analysts said.
“A de-escalation of the trade war between the U.S. and China would reduce the downside in economic growth prospects and limit the downside for oil demand growth,” said UBS analyst Giovanni Staunovo.
Elsewhere, U.S. crude stocks rose while gasoline and distillate inventories fell last week, the Energy Information Administration said on Wednesday.
Crude inventories rose by 515,000 barrels to 442.9 million barrels in the week ended April 11, the EIA said, compared with analysts’ expectations in a Reuters poll for a 507,000-barrel rise.
Trump tariffs
Price gains were limited by expectations from the International Energy Agency on Tuesday that global oil demand will grow at its slowest for five years in 2025.
The World Trade Organization sharply cut its forecast for global merchandise trade on Wednesday, adding that U.S. tariffs could bring about the heaviest slump since the height of the COVID pandemic.
Trump has ratcheted up tariffs on Chinese goods, prompting Beijing to impose retaliatory duties on U.S. imports.
Concerns over Trump’s tariffs, combined with rising output from the OPEC+ group comprising OPEC and allies such as Russia, have dragged oil prices down by about 13% this month.
The uncertainty over trade tensions has led several banks, including UBS, BNP Paribas and HSBC, to cut their crude price forecasts.
Data on Wednesday showed China’s GDP grew 5.4% year-on-year in the first quarter, beating the 5.1% expected in a Reuters poll.
“The better than expected performance was precipitated by exporters front-loading shipments ahead of the implementation of U.S. excise duties on Chinese goods and, in all probability, will not be repeated for the rest of the year as the two biggest economies in the world are doing their best to decouple,” said PVM Oil analyst Tamas Varga.
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