Oil prices climbed to a two-week high on Tuesday, driven by sanctions on Russian and Iranian crude exports and escalating Middle East tensions, despite concerns that trade tariffs could slow global growth and energy demand. Brent crude settled at $77.00 per barrel, up $1.13 (1.5%), while WTI rose to $73.32 per barrel, gaining $1.00 (1.4%), marking the third consecutive day of gains and the highest closes since January 28.
Supply concerns intensified as U.S. sanctions targeting Russian oil shipments disrupted crude flows to China and India, while new measures aimed at Iranian exports to China added to market uncertainty. The threat of renewed conflict in the Middle East further supported prices, with Israeli Prime Minister Netanyahu warning of an end to the Gaza ceasefire if hostages were not released by Saturday. Meanwhile, U.S. President Trump echoed this stance, threatening to let “hell break out” if his demands were not met.
Despite these supply risks, tariff-related concerns limited oil price gains. On Monday, Trump imposed a 25% tariff on steel and aluminum imports, prompting backlash from Mexico, Canada, and the EU and increasing fears of a trade war. Analysts caution that these tariffs could hurt oil-intensive sectors of the economy, reduce demand, and contribute to higher inflation, which may prompt central banks to maintain elevated interest rates.
On the supply and demand outlook, the U.S. Energy Information Administration (EIA) projected that global petroleum production and consumption will hit record highs in 2025 and 2026. The market is also awaiting U.S. inventory data, with analysts expecting a 3-million-barrel stock build for the week ending February 7, marking the third consecutive weekly increase—the longest streak since mid-November.