Oil News: Iran Sanctions vs. U.S. Stockpiles – What’s Next for Crude Prices?

Crude Oil Prices Slip as Rising U.S. Stockpiles and Trade Tensions Weigh on Market

Light crude oil futures are edging lower on Wednesday as traders attempt to consolidate above key technical levels. Prices are hovering near the 50-day moving average at $70.94 and the 200-day moving average at $70.82, both of which helped prevent a steeper selloff on Tuesday when crude briefly dipped to $70.67.

If prices hold above these levels, bullish momentum could build, potentially pushing WTI toward the key pivot point at $75.47. A decisive break above this level would signal renewed buying interest. However, if the 200-day moving average fails as support, a sharp decline toward $67.09 could follow.

At 11:36 GMT, Light Crude Oil Futures are trading $72.07, down $0.63 or -0.87%.

U.S. Crude Inventories Surge, Pressuring Prices

Crude oil prices dipped as traders reacted to an unexpected rise in U.S. crude inventories, signaling weaker near-term demand. According to the American Petroleum Institute (API), crude stocks increased by 5.03 million barrels for the week ending January 31, exceeding expectations. Gasoline inventories also climbed by 5.43 million barrels, while distillate stocks saw a notable decline of 6.98 million barrels.

Rising crude and fuel stockpiles in the world’s largest oil-consuming nation indicate softer demand, amplifying concerns that slowing economic activity and trade uncertainty could further weigh on energy markets. The official inventory report from the U.S. Energy Information Administration (EIA), expected later Wednesday, is projected to show a 2.4 million barrel build, which could add further pressure on prices if confirmed.

Sino-U.S. Trade War Raises Demand Concerns

Ongoing trade tensions between the U.S. and China continue to dampen the demand outlook for crude oil. Prices briefly fell by as much as 3% on Tuesday after China announced new tariffs on U.S. energy imports, including crude oil, liquefied natural gas, and coal. These retaliatory measures, imposed in response to fresh U.S. levies on Chinese exports, threaten to curb global trade and economic growth, which in turn could erode oil demand.

Analysts warn that escalating trade disputes could weaken business investment and consumer spending, further pressuring crude markets. “Trump tariff chaos and trade war is no good for global growth and oil demand growth,” said Bjarne Schieldrop, chief commodities analyst at SEB.

Iran Sanctions Could Tighten Supply Despite Demand Worries

While demand-side concerns are pressuring oil prices, potential supply disruptions from Iran are providing some support. U.S. President Donald Trump has reinstated his “maximum pressure” campaign against Tehran, seeking to curb its oil exports.

Iran’s crude production has been running at its highest levels since 2018, contributing to global supply. However, if U.S. sanctions significantly reduce Iranian exports once again, supply could tighten, offering a counterbalance to demand concerns. “Should these sanctions be reimposed, the resulting supply squeeze could sustain the upward momentum in oil prices, particularly amid slower-than-expected supply adjustments from OPEC+ producers,” said Ahmad Assiri, research strategist at Pepperstone.

Market Outlook: Bearish Near-Term, Volatile Longer-Term

With rising U.S. inventories and escalating trade tensions weighing on demand, crude oil prices face bearish pressure in the near term. If the EIA confirms a larger-than-expected stockpile build, prices could test key support levels, potentially breaking below the 200-day moving average.

However, geopolitical risks, particularly surrounding Iran, could introduce volatility and provide a price floor. If supply disruptions emerge while OPEC+ remains slow to adjust output, oil prices could see renewed upside momentum. Traders should watch technical levels closely, as a break below $70 could accelerate selling, while a push above $75.47 would indicate stronger bullish sentiment.

More Information in our Economic Calendar.