Oil posts strong gains as US further sanctions Iranian crude

by Yongchang Chin and Alex Longley

Oil extended its biggest advance in more than two weeks as OPEC+ made progress toward a deal to further delay the restoration of shuttered supply and the US imposed more sanctions on Iranian crude.

Brent crude traded near $74 a barrel after a 2.5% jump on Tuesday, while West Texas Intermediate was above $70. The producer group is edging closer to an agreement to push back a plan to revive output by a further three months, delegates said. Meanwhile, the US sanctioned 35 entities and ships that it said played a critical role in the transport of Iranian oil.

Despite the recent rally, crude has been locked in a band of roughly $6 since the middle of October, buffeted by competing drivers including the imminent Donald Trump presidency, geopolitical tensions in the Middle East and Ukraine and a lackluster demand outlook from top importer China. With widespread concern the global market faces a glut next year, OPEC+ members will meet on Thursday to review supply policy for 2025.

New sanctions on Iran “together with the likelihood of OPEC+ continuing to delay their planned production increase, reinforces our view of limited downside risks to prices in the near term,” said Ole Hvalbye, a commodities analyst at SEB AB.

In the US, the American Petroleum Institute reported nationwide crude stockpiles rose by 1.2 million barrels last week, with large builds also seen in inventories of gasoline and distillates, a category that includes diesel.