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Oil prices climbed more than 1 per cent on Wednesday, as investors weighed a fresh round of US sanctions on Iran, a drop in US crude stocks and a softer tone from President Donald Trump towards the Federal Reserve and his tariff war with China.
Brent crude futures hit their highest since April 4 earlier in the session at $68.65 a barrel and were up $1.10, or 1.63 per cent, at $68.54 a barrel at 0842 GMT. US West Texas Intermediate crude rose $1.12, or 1.76 per cent, to $64.79.
Sending bullish signals on the supply side, the US issued new sanctions targeting an Iranian shipping magnate whose network ships hundreds of millions of dollars' worth of Iranian liquid petroleum gas and crude oil, the US Treasury said.
Meanwhile, US crude oil inventories last week fell by around 4.6 million barrels while gasoline inventories drew 2.2 million barrels and distillate stocks by 1.6 million barrels, market sources said, citing American Petroleum Institute data.
US government data on oil stockpiles is due at 10:30 a.m. ET (1430 GMT) on Wednesday. Analysts on average estimated an 800,000 barrel decline in US crude oil stocks last week, a Reuters poll showed.
Stoking hopes of higher energy demand, Trump signalled the possibility of lower tariffs on Chinese imports. The Chinese foreign ministry said the US should stop making threats and resorting to coercion if it wants to make a deal.
US Treasury Secretary Scott Bessent said he believed there would be ade-escalation in US-China trade tension but that negotiations had not yet started and would be a "slog", a person who heard his closed-door presentation to investors said.
Trump alsobacked away from the threat of firing Fed Chair Jerome Powell after days of criticism for the Fed not cutting interest rates.
Capping gains, the International Monetary Fund said on Tuesday that worldwide economic output will slow in the months ahead as Trump's steep tariffs on virtually all trading partners begin to bite. -Reuters