Oil rose for a second day after the Trump administration ratcheted up pressure on Iran’s energy exports, while talks between the US and a handful of key trade partners stirred optimism that agreements on trade can be reached.
West Texas Intermediate surged 3.5% to settle near $65 a barrel, marking the largest two-day increase since early January. President Donald Trump said he is confident a trade deal with the European Union could be achieved, and negotiations between the US and Japan bolstered expectations that deals can be struck to avoid the worst effects of tariffs.
Futures were also propelled higher by investors covering short positions and algorithmic traders turning marginally more bullish ahead of the long weekend. Oil futures won’t trade on Friday, a holiday in many countries, crimping volumes.
On the Middle East front, Treasury Secretary Scott Bessent said the US would apply maximum pressure to disrupt Iran’s oil supply chain as his department sanctioned a second Chinese refinery accused of handling crude from the Islamic Republic.
The so-called teapot oil processor sanctioned by the US — Shandong Shengxing Chemical Co. — had allegedly handled more than $1 billion of Iranian crude, the Treasury Department said. Tehran, meanwhile, warned that nuclear talks with Washington may fall apart if the Trump administration “moves the goalposts.”
“While the macroeconomic backdrop remains mixed, it has the potential to either amplify market rallies or derail them entirely, depending on how these geopolitical tensions evolve,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth Group.
The pressure of Trump’s sweeping trade measures has put crude on the back foot this month, with prices at one point trading about 30% lower than their high for the year.
This week’s rebound was aided by US government data that showed inventory levels at Cushing, Oklahoma — the delivery point for West Texas Intermediate — at their lowest for this time of year since 2008. That’s helping support nearby timespreads, with WTI’s prompt spread hitting the strongest since February on Wednesday.
Oil Prices:
WTI for May delivery gained 3.5% to settle at $64.68 a barrel in New York.
Brent for June settlement rose 3.2% to settle at $67.96 a barrel