By Scott DiSavino
NEW YORK (Reuters) -Oil prices edged up for a third straight day on Tuesday as sanctions raised concerns about Russian and Iranian oil supplies, outweighing worries that escalating trade tariffs would boost prices and inflation and dampen global economic growth.
Brent futures rose 86 cents, or 1.1%, to $76.73 a barrel by 11:06 a.m. EST (1606 GMT), while U.S. West Texas Intermediate (WTI) crude rose 73 cents, or 1.0%, to $73.05.
“With the U.S. bearing down on Iranian exports and sanctions still biting into Russian flows, Asian crude grades remain firm and underpin the rally from yesterday,” said PVM oil analyst John Evans.
Shipments of Russian oil to leading importers China and India have been significantly disrupted in recent weeks by U.S. sanctions targeting tankers, producers and insurers.
Russia, however, said on Tuesday that U.S. sanctions should not affect Moscow’s oil trade with India, the world’s third-biggest importer of crude oil.
Adding to supply jitters are U.S. sanctions on networks shipping Iranian oil to China after U.S. President Donald Trump restored his “maximum pressure” on Iranian oil exports last week.
Tuesday’s oil price gains were kept in check by Trump’s latest trade tariffs, which could dampen global growth and energy demand.
On Monday, Trump raised tariffs on steel and aluminium imports to the U.S. to 25% “without exceptions or exemptions.”
The European Union said it would respond with “firm and proportionate countermeasures,” escalating fears of a trade war.
“Tariffs and counter-tariffs have the potential to weigh on the oil-intensive part of the global economy in particular, creating uncertainty over demand,” Morgan Stanley said in a note.
“However, we think this backdrop will probably also cause OPEC+ to extend current production quotas once again.”
The Organization of the Petroleum Exporting Countries and its allies like Russia, a group known as OPEC+, said earlier this month that it would stick to its policy of gradually raising oil output from April.
OPEC member Saudi Arabia’s crude supply to China is set to slide in March from the prior month, trade sources said, after the kingdom hiked prices to the highest in more than two years.
In the U.S., Federal Reserve Chair Jerome Powell told the Senate Banking Committee on Tuesday that the Fed was in no rush to cut its short-term interest rate again given an economy that is “strong overall,” with low unemployment and inflation that remains above the Fed’s 2% target.
A majority of economists in a Reuters poll forecast the Fed would wait until the next quarter before cutting interest rates again.
“The tariff factor comes into play in reducing the possibility of rate cuts anytime soon,” analysts at energy advisory firm Ritterbusch and Associates said in a note.
Tariffs can cause prices and inflation to rise. The Fed uses higher interest rates to combat rising prices. So long as the Fed and other central banks keep interest rates higher for longer, borrowing costs will remain elevated, which can slow economic growth and ultimately demand for oil.
SUPPLY, DEMAND AND INVENTORIES
The U.S. Energy Information Administration (EIA) [EIA/M] will release U.S. and global supply and demand forecasts later on Tuesday, while the American Petroleum Institute trade group and the EIA will put out U.S. oil inventory data on Tuesday and Wednesday respectively. [EIA/S] [API/S]
Analysts forecast energy firms added about 2.6 million barrels of oil to U.S. stockpiles during the week ended Feb. 7.
If correct, that would be the first time energy firms added oil into storage for three weeks in a row since mid-November. That compares with an increase of 12.0 million barrels during the same week last year and an average build of 4.9 million barrels over the past five years (2020-2024).
(Reporting by Scott DiSavino in New York and Ahmad Ghaddar in London; Additional reporting by Enes Tunagur in London and Siyi Liu in Singapore; Editing by Angus MacSwan, David Goodman and Nia Williams)
