By Colleen Howe and Trixie Yap
BEIJING (Reuters) -Oil prices rose for a second day on Tuesday as fresh U.S. sanctions imposed on Middle Eastern producer Iran increased concerns supply might tighten and as global refining margins remained strong.
Brent crude futures rose 15 cents, or 0.2%, to $74.93 a barrel by 0724 GMT. U.S. West Texas Intermediate crude futures climbed 23 cents, or 0.3%, to $70.93 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 U.S. 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.
The U.S. on Monday put new sanctions on more than 30 brokers, tanker operators, and shipping companies for their role in transporting Iranian oil. President Donald Trump has said he wants to bring Iran’s crude exports to zero.
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.
For now, fuel demand strength in the West is also supportive of oil markets, some analysts say.
“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 U.S. 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 overall 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, U.S. 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.
(Reporting by Colleen Howe; Editing by Shri Navaratnam and Jacqueline Wong)
