Oil prices rose nearly 2% on Wednesday to a two-week high amid concerns over global supply following new U.S. sanctions on Chinese importers of Iranian oil. Brent crude futures settled up $1.18, or 1.8%, at $65.85 a barrel, while U.S. West Texas Intermediate (WTI) crude gained $1.14, or 1.9%, to $62.47.
The U.S. imposed sanctions on a China-based teapot refinery and other buyers of Iranian crude as part of President Donald Trump’s efforts to curb Tehran’s oil exports. The move comes alongside renewed talks over Iran’s nuclear program, with the next round scheduled in Rome on Saturday. Iran’s foreign minister said the country’s right to enrich uranium remains non-negotiable.
Oil futures also found support from OPEC’s announcement that countries such as Iraq and Kazakhstan plan to deepen output cuts to compensate for exceeding previous quotas.
Weekly U.S. inventory data from the Energy Information Administration showed crude stocks rose by 515,000 barrels to 442.9 million, while gasoline and distillate inventories fell. The crude build was slightly above analysts’ expectations for a 507,000-barrel increase.
Prices pulled back slightly after U.S. Federal Reserve Chair Jerome Powell warned that the size of recent tariff increases could have larger-than-expected economic effects, including higher inflation and slower growth. The IEA said on Tuesday that global oil demand growth this year is expected to be the weakest since 2020.
Tensions between the U.S. and China remain elevated. Beijing has responded to recent tariff hikes with retaliatory duties. According to Bloomberg, China is seeking more respect from Washington before it agrees to resume trade talks. Analysts say de-escalation could ease pressure on oil demand.
Several banks, including UBS, BNP Paribas, and HSBC, have lowered oil price forecasts amid the tariff uncertainty. UBS estimated that if global GDP growth slows by 15%—similar to the impact of the 2018–2019 trade war—oil demand growth could drop to 600,000 barrels per day in 2025, about half of pre-tariff expectations.