[NEW YORK] Oil prices settled more than US$1 per barrel higher on Tuesday (Apr 22) as new US sanctions against Iran and rising equity markets helped spark a recovery rally from the prior session’s steep sell-off.
Brent crude futures rose US$1.18, or 1.8 per cent, to settle at US$67.44 per barrel. The US West Texas Intermediate (WTI) crude contract for May, which expired on Tuesday’s settlement, gained US$1.23, or 2 per cent, to close at US$64.32.
The more actively traded WTI June contract also gained 2 per cent to settle at US$63.47.
Brent and WTI fell more than 2 per cent on Monday as the United States and Iran signalled progress in talks over the latter’s nuclear programme, and as stock markets sold off sharply on US President Donald Trump’s criticism of Federal Reserve chair Jerome Powell.
On Tuesday, the US issued fresh sanctions targeting an Iranian liquefied petroleum gas and crude oil shipping magnate and his corporate network.
Despite progress in its talks with the US, 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.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
“Either some nuclear deal is agreed or the US tries to drive Iran’s oil flows to zero, and it’s increasingly looking like a zero-flow scenario,” Kilduff said.
Meanwhile, equity markets also rebounded on Tuesday on signs of a potential de-escalation in U.S.-China trade tensions.
US Treasury Secretary Scott Bessent on Tuesday said that he believes trade tensions between the US and China will de-escalate, although he cautioned talks with Beijing have not started and will be a “slog”.
Washington’s standoff with Beijing, and tariffs on virtually all US trading partners, have weighed heavily on oil prices in recent weeks as investors expressed concerns of a potential global economic slowdown that would severely erode oil demand.
The International Monetary Fund on Tuesday slashed its economic outlook for this year, while global finance chiefs swarmed Washington seeking deals with Trump’s team to lower tariffs.
“(US tariffs) risk slowing global trade, disrupting supply chains, and increasing costs across major energy-consuming industries – all of which could significantly dampen oil demand,” said Marcus McGregor, head of commodities research for asset management firm Conning.
On the supply front, US crude oil inventories fell by nearly 4.6 million barrels last week, market sources said on Tuesday citing American Petroleum Institute data.
US government data on stockpiles is due at 10.30 am ET (1430 GMT) on Wednesday. Analysts polled by Reuters expect, on average, an 800,000 barrels decline in US crude oil stocks for last week. REUTERS
