Oil Near Three-Week High On Supply Fears, U.S. Stocks Drop

Oil prices rose slightly due to supply worries as the U.S. increased its measures to restrict oil exports from Venezuela and Iran on Wednesday. At the same time, a larger-than-anticipated decline in U.S. crude stocks also provided additional support. Brent crude futures increased by 20 cents, or 0.3 per cent, reaching $73.22 per barrel by 0404 GMT, while U.S. West Texas Intermediate crude futures also climbed 20 cents, or 0.3 per cent, to $69.20 per barrel, per a Reuters report.

"Crude oil prices continue to exhibit a bullish trend following Trump's sanctions on Venezuelan oil, heightening supply-side worries," Priyanka Sachdeva, a senior market analyst at Phillip Nova, stated in a market commentary on Wednesday.

Oil prices rise on supply concerns

On Monday, Trump signed an executive order enabling his administration to implement blanket 25 per cent tariffs under the 1977 International Emergency Economic Powers Act on imports from any nation purchasing Venezuelan crude oil and liquid fuels. Venezuela's primary export is oil. China, which is already subject to U.S. import tariffs, remains its biggest purchaser. Venezuelan oil exports to its main purchaser, China, came to a halt on Tuesday as Chinese traders and refiners indicated they were awaiting clarity on the execution of the order and whether Beijing would instruct them to cease purchases.

Last week, Washington implemented a fresh set of sanctions on Iran's oil exports, focusing on organizations like Shouguang Luqing Petrochemical, a "teapot" or independent refinery located in Shandong province, eastern China, along with ships that supplied oil to these facilities in China, the largest purchasers of Iranian crude. The market was further supported by data from the American Petroleum Institute indicating that U.S. crude stockpiles declined by 4.6 million barrels last week, reflecting strong fuel demand in the largest economy globally.

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Analysts surveyed by Reuters anticipated a decrease of 1 million barrels. Official U.S. government figures regarding crude stockpiles are expected on Wednesday. The rise in oil prices is a short-lived occurrence as the possible economic downturn from Trump's tariffs will restrain price increases, stated Phillip Nova's Sachdeva. To further limit oil prices, the U.S. struck agreements with Ukraine and Russia to halt assaults at sea and on energy facilities, with Washington consenting to advocate for the removal of certain sanctions on Moscow. Kyiv and Moscow both indicated they would depend on Washington to uphold the agreements while voicing doubt that the opposing side would adhere to them.