Oil Prices Up as U.S. Plans to Sanction Iran’s Crude Buyers
Oil prices edged higher on Thursday as US warnings of potential secondary sanctions on buyers of Iranian oil heightened supply concerns, while a larger-than-expected drop in US crude inventories supported a high-demand outlook.
International benchmark Brent crude futures traded at $94.94 per barrel, up around 0.01% from the previous close of $94.93. US benchmark West Texas Intermediate (WTI) rose about 0.3% to $91.57 per barrel, compared with $91.29 in the previous session.
Prices found support from signals that the US could impose “secondary sanctions” on countries purchasing Iranian oil. The Treasury Department announced on Wednesday that the US imposed new sanctions targeting Iranian oil smuggling and financing networks.
The Department sanctioned more than two dozen individuals, companies and vessels connected to the network, as well as an alleged financier involved in exchanging Iranian oil for Venezuelan gold to benefit Hezbollah and Iran’s Islamic Revolutionary Guard Corps (IRGC).
The State Department said in a separate statement that the action aims to “decisively limit Iran’s ability to generate revenue” as shipping through the Strait of Hormuz remains highly disrupted.
“Financial institutions should be on notice that Treasury will leverage all tools and authorities, including secondary sanctions, against those that continue to support Tehran’s terrorist activities,” Treasury Secretary Scott Bessent said in a statement.
Meanwhile, the US and Iran signaled a potential for flexibility in their diplomatic standoff despite failing to reach a final agreement during weekend talks in Pakistan, The Wall Street Journal reported Wednesday.
A degree of flexibility exists on both sides, people familiar with the negotiations said, noting that discussions specifically addressed the core issue of uranium enrichment.
While the first round of direct talks in the Pakistani capital Islamabad ended without a deal, the participants are expected to meet for further sessions soon.
Further, the unexpected draw in US commercial crude oil inventories reinforced perceptions of strong demand, adding upward pressure on prices.
The Energy Information Administration (EIA) announced on Wednesday that US stockpiles fell by 0.2% in the week ending April 10.
Inventories declined by 900,000 barrels to around 463.8 million barrels, while market expectations had pointed to an increase of 2.1 million barrels.
Strategic petroleum reserves, which are excluded from commercial crude stocks, fell by 4.1 million barrels and gasoline inventories dropped by 6.3 million barrels, during the same week.
