Oil prices stage recovery on new Iran sanctions
NEW YORK: Oil prices rose more than $1 per barrel on Tuesday as new US sanctions against Iran and rising equity markets helped spark a recovery rally from the prior session's steep selloff.
Brent crude futures rose $1.74, or 2.6%, to $68 per barrel by 12:16 p.m. ET (1616 GMT). The US West Texas Intermediate crude contract for May, which expires on Tuesday, was up $1.96, or 3.1%, to $65.04.
The more actively traded WTI June contract gained $1.92, or 3.1%, to $64.33.
The United States on Tuesday issued fresh sanctions targeting an Iranian liquefied petroleum gas and crude oil shipping magnate and his corporate network.
Although talks between Washington and Tehran over the latter's nuclear program made progress over the past weekend, failure to reach a deal could weigh heavily on Iran's oil exports amid tightening US sanctions, said John Kilduff, partner at New York-based Again Capital.
'Either some nuclear deal is agreed or the US tries to drive Iran's oil flows to zero, and its increasingly looking like a zero-flow scenario,' Kilduff said.
A surge in equity markets, indicative of higher risk appetite from investors, also aided oil prices, Mizuho analyst Robert Yawger said.
US stocks rose on Tuesday as investors focused on corporate earnings, after President Donald Trump's mounting criticism of Federal Reserve Chair Jerome Powell led to a sharp selloff in the previous session.
Brent and WTI benchmarks fell more than 2% on Monday due to the progress in US-Iran talks and the equities selloff.
Despite Monday's recovery, concerns that US tariffs could slash global economic activity will continue to weigh on oil prices going forward, analysts warned.
The International Monetary Fund on Tuesday slashed its economic outlook for this year, citing US tariffs at 100-year highs and rising trade tensions between Washington and Beijing.
Meanwhile, Russia's economy ministry cut its forecast for the average price of Brent crude in 2025 by nearly 17% from its projection in September, according to documents seen by Reuters.
US crude oil and gasoline stockpiles were expected to have fallen last week, while distillate inventories are likely to have risen, a preliminary Reuters poll showed on Monday, ahead of weekly reports from the American Petroleum Institute and the Energy Information Administration.
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