Oil prices hand back early gains; Iran nuclear talks in focus

Investing.com-- Oil prices fell Wednesday, handing back earlier gains as traders digested new U.S. sanctions on Iran amid ongoing nuclear talks as well as a large decline in U.S. crude stockpiles.

At 09:15 ET (13:15 GMT), Brent Oil Futures expiring in June fell 0.6% to $67.07 per barrel, while West Texas Intermediate (WTI) crude futures also dropped 0.5% to $63.35 per barrel.

Both contracts settled nearly 2% higher on Tuesday.

U.S. sanctions Iran’s LPG magnate amid nuclear talks

The U.S. Department of the Treasury on Tuesday imposed new sanctions targeting Seyed Asadoollah Emamjomeh, a prominent Iranian businessman in the liquefied petroleum gas (LPG) sector, along with his associated corporate network. 

This action is part of Washington’s broader strategy to curtail Iran’s energy revenues, which are believed to fund destabilizing activities in the Middle East.

“Emamjomeh and his network sought to export thousands of shipments of LPG—including from the United States—to evade U.S. sanctions and generate revenue for Iran,” said Secretary of the Treasury Scott Bessent in a statement.

However, despite these new sanctions, both parties have agreed to commence expert-level discussions to design a framework for a potential nuclear deal, with the next meeting scheduled on Saturday in Oman.

On a visit to Beijing where he met Chinese Vice Premier Ding Xuexiang, Iranian Foreign Minister Abbas Araqchi told Iran’s state media it was too early to judge the outcome of Iran-U.S. talks, which he said were going in the right direction.

"We are cautiously optimistic and if the Americans continue to stay in a constructive way and avoid any unrealistic, undoable demands, I am confident we can conclude a good deal at the end," Iran’s top diplomat added.

A nuclear deal between the two sides could open the possibility of Iranian oil returning to the global market en masse.   

Trump backs off Powell threat, signals trade optimism

President Donald Trump on Tuesday eased tensions with the Federal Reserve, backing off from earlier threats to dismiss Chair Jerome Powell. 

The move comes after days of heightened criticism from the president, who has repeatedly urged the central bank to cut interest rates more aggressively.

Trump also expressed optimism over potential trade negotiations with China. He said a potential deal could lead to a “substantial” reduction in tariffs.

A reduction of tariffs could lead to increase economic activity in China, the world’s largest crude importer.

U.S. crude stockpiles jumped last week - API

The American Petroleum Institute (API) on Tuesday reported a significant drawdown in U.S. crude oil inventories, with a decrease of 4.565 million barrels for the week ending April 18. 

This contrasts sharply with the previous week’s unexpected build of 2.4 million barrels, indicating a notable shift in supply-demand dynamics. 

The substantial draw suggests a tightening in the oil market, potentially due to increased refinery activity or higher export levels. 

Market participants awaited the official data from the U.S. Energy Information Administration (EIA), scheduled for release later in the day, to confirm these trends.

(Ayushman Ojha contributed to his article.)