Onome Amuge
Oil prices climbed more than 1 per cent on Tuesday as US sanctions on Iranian crude exports tightened supply concerns, while investors looked ahead to a weekend OPEC+ meeting where the producers’ group is expected to maintain voluntary cuts.
Brent crude, the international benchmark, settled 99 cents, or 1.45 per cent, higher at $69.14 a barrel. US marker West Texas Intermediate rose $1.58, or 2.47 per cent, to $65.59. Trading in WTI resumed after Monday’s closure for the Labor Day holiday.
The gains came after Washington imposed fresh sanctions on a network of shipping companies and vessels accused of disguising Iranian crude as Iraqi oil. The US Treasury Department said the scheme was led by an Iraqi-Kittitian businessman and was designed to funnel revenue to Tehran in defiance of restrictions.
The measures underscored the Trump administration’s determination to keep pressure on Iran even as nuclear negotiations remain stalled. A sixth round of talks was suspended earlier this year following the outbreak of a regional conflict, with no clear timeline for resumption.
“The US cracking down on Iranian exports was definitely supportive of prices today,” said Phil Flynn, senior analyst at Price Futures Group.
Markets are now turning attention to Sunday’s meeting of OPEC and its allies, where analysts expect the core group of eight members, including Saudi Arabia and Russia, to keep voluntary output cuts in place. Those curbs have helped stabilise crude around $60 to $70 a barrel despite signs of softening demand in Asia and Europe.
“OPEC+ is likely to wait for more data after the US summer driving season before adjusting strategy. With a supply surplus looming in the fourth quarter, ministers may prefer to maintain discipline,” said independent analyst Gaurav Sharma.
Saudi Aramco and Iraq’s SOMO have also halted sales to India’s Nayara Energy following European sanctions in July against the Russian-linked refiner, according to three people familiar with the matter. Traders say the move could tighten access to non-sanctioned barrels and complicate flows for refiners in South Asia.
“There is growing concern about availability in the non-sanctioned pool of oil. If sanctions ratchet up, buyers will have fewer opportunities to tap grey-market barrels,”said John Kilduff, a partner at Again Capital.
The market was also assessing the outcome of last week’s Shanghai Cooperation Organisation summit in Beijing, attended by leaders from China, Russia, India and more than 20 other non-Western states. The gathering, where Chinese president Xi Jinping and Russia’s Vladimir Putin promoted a Global South economic order, could sharpen tensions with Washington, analysts warned.
“This was an important conference that was not on everyone’s radar as it should have been. It may spur the US into tougher secondary sanctions, particularly targeting India, which would have knock-on effects in energy markets,” said Kilduff.
Trade tensions are already flaring, with Washington doubling tariffs on some Indian goods last week in retaliation for New Delhi’s continued imports of Russian crude. India’s trade minister Piyush Goyal confirmed on Tuesday that talks are under way on a bilateral deal to ease frictions.
On the supply side, Ukraine’s drone campaign has shut facilities responsible for about 17 per cent of Russia’s refining capacity, equal to 1.1 million barrels per day, according to Reuters calculations. The disruption adds to tightness in global product markets.
Meanwhile, Kazakhstan reported a 2 per cent rise in daily crude output in August to 1.88 million barrels, up from 1.84 million in July. The increase highlights steady flows from Central Asia even as Russia faces growing operational challenges.
Demand signals are mixed. UBS analyst Giovanni Staunovo said expectations of another draw in US crude inventories were lending support to prices, though the end of the summer driving season following Labor Day could soften consumption in the world’s largest fuel market.
Despite Tuesday’s bounce, crude remains well below this year’s highs, reflecting investor unease over faltering global growth, trade frictions, and the uncertain trajectory of Chinese demand.
Analysts say oil prices are likely to remain range-bound ahead of Sunday’s OPEC+ meeting, with sanctions and supply disruptions offsetting seasonal demand headwinds.
