Oil Prices Rise Amid Supply Concerns and U.S. Stock Decline

On Wednesday, oil prices experienced an upward trend as concerns regarding supply intensified. The increase was particularly influenced by the United States ramping up its efforts to curb oil exports from Venezuela and Iran. Additionally, a surprising decline in U.S. crude inventories provided further support to the oil market.

Brent crude futures saw a small rise of 20 cents, equating to 0.3%, settling at $73.22 per barrel by 0404 GMT. Similarly, U.S. West Texas Intermediate crude futures also rose by the same amount to $69.20 per barrel. Notably, both contracts reached their highest levels in three weeks during the previous trading session.

According to Priyanka Sachdeva, a senior market analyst at Phillip Nova, "Crude oil prices continue to reflect a bullish trend following President Trump's sanctions on Venezuelan oil, which raise concerns about supply."">

Recently, Trump signed an executive order enabling his administration to impose comprehensive 25% tariffs on imports from any country purchasing Venezuelan crude oil and liquid fuels. Venezuela relies heavily on oil exports, with China being its primary buyer. However, trading of Venezuelan oil to China hit a snag on Tuesday, as Chinese traders paused to evaluate the implications of the new sanctions and to see whether Beijing would instruct them to cease purchases.

Moreover, the U.S. government implemented a new round of sanctions targeting Iran's oil sales. This included restrictions on entities like Shouguang Luqing Petrochemical, a small independent refinery in Shandong province, China, as well as on vessels supplying oil to facilities that process Iranian crude.

The market was also buoyed by data from the American Petroleum Institute, which indicated a significant drop of 4.6 million barrels in U.S. crude inventories last week. This decline was greater than the 1 million barrels that analysts surveyed by Reuters had anticipated, suggesting robust demand for fuel in the world’s largest economy.

Official data regarding U.S. crude inventories was due to be released later on Wednesday. Despite the rise in oil prices, analysts caution that this trend may be temporary. Economic challenges stemming from Trump’s tariffs could hold back longer-term price increases, according to Sachdeva.

Further complicating the oil price landscape, the U.S. has reached agreements with both Ukraine and Russia to cease attacks at sea and on energy targets. Washington has also agreed to advocate for lifting certain sanctions against Russia. However, both Kyiv and Moscow have expressed skepticism about each other's commitment to these deals.

Oil, Supply, Stocks