LONDON: Oil prices were steady on Tuesday, after a bump the previous day when fresh US sanctions imposed on Iran increased concerns that supply might tighten, as global refining margins remained strong.
Brent crude futures were down 5 cents to $74.73 a barrel by 1:46 p.m. Saudi time. US West Texas Intermediate crude futures were up 2 cents to $70.72 a barrel. Both contracts gained in Monday’s session after a $2 drop last Friday.
“In the short term, I continue to think crude oil is looking for a base. The fresh US sanctions announced on Iran overnight will likely assist with this as will the Iraqi oil minister’s commitment to rein in its oversupply,” said IG market analyst Tony Sycamore.
On Monday, President Trump hit Iran with the second set of sanctions this month, maintaining pressure as he vies to shut down Iranian crude exports. The US sanctioned oil brokers in the United Arab Emirates and Hong Kong, tanker operators and shipping companies in India, and the head of Iran’s National Iranian Oil Company for their role in transporting Iranian oil.
Iran is the third-largest producer in the Organization of the Petroleum Exporting Countries, pumping 3.2 million barrels per day in January, according to a Reuters survey of OPEC output.
Also on Monday, the third anniversary of Russia’s invasion of Ukraine, the EU listed 73 ships enabling sanctions evasion, known as the shadow fleet, while Britain sanctioned 40 vessels for transporting Russian oil.
Western fuel demand strength also supported oil markets, some analysts said.
“Globally complex refining margins are looking robust, with strong fuel oil and distillates crack, particularly in USGC and NEW benefiting from the heating oil demand from the cold snap,” said Sparta Commodities analyst Neil Crosby in a note, referring to the US Gulf Coast and Northwest Europe.
Margins for a typical refinery in Singapore processing regional benchmark Dubai crude averaged $3.50 a barrel in February so far, compared with $2.30 a barrel last month, LSEG pricing data showed.
However, gains were capped by the uncertain demand outlook and a lack of fresh economic indicators from key consumer China.
“At this juncture, clear demand-side factors that can propel oil prices higher are still unknown until the middle of March, when China policymakers will likely announce new stimulus policies and a 2025 growth target after the conclusion of the ‘Two Sessions’,” said OANDA senior market analyst Kelvin Wong.
Meanwhile, US President Donald Trump said on Monday that tariffs against Canadian and Mexican imports scheduled to start on March 4 are “on time and on schedule” despite efforts by the two trading partners to address Trump’s concerns about border security and fentanyl. Analysts say the tariffs would be bearish for global oil demand growth.
