Oil Holds Steady After Gains from Iran Sanctions and Strong Refining Margins

Crude Oil Prices Stabilize Following Monday’s Surge

Oil prices remained steady on Tuesday, following a bump in the previous session driven by fresh U.S. sanctions on Iran and robust global refining margins. Market concerns over potential supply disruptions helped offset uncertainty around demand.

Brent crude futures edged down 5 cents to $74.73 per barrel by 10:46 GMT, while West Texas Intermediate (WTI) crude futures rose 2 cents to $70.72 per barrel. Both contracts had gained in Monday’s session after falling by $2 last Friday.

“In the short term, crude oil is searching for a price floor. The new U.S. sanctions against Iran will likely support this, as will the Iraqi oil minister’s commitment to curb excess supply,” said Tony Sycamore, market analyst at IG.

U.S. Ramps Up Pressure with New Iran Sanctions

On Monday, President Donald Trump imposed a second round of sanctions on Iran this month, aiming to further restrict the country’s crude exports. The new measures targeted oil brokers in the UAE and Hong Kong, tanker operators and shipping firms in India, as well as the head of Iran’s National Iranian Oil Company (NIOC) for their involvement in Iranian oil shipments.

Iran remains OPEC’s third-largest oil producer, pumping 3.2 million barrels per day in January, according to a Reuters survey of OPEC production.

The new U.S. sanctions follow EU and UK actions taken on the third anniversary of Russia’s invasion of Ukraine. The EU blacklisted 73 vessels accused of helping Russia evade sanctions via a so-called “shadow fleet,” while the UK imposed sanctions on 40 ships involved in transporting Russian crude.

Refining Margins Remain Strong, Supporting Oil Prices

In addition to supply concerns, strong demand for refined products in Western markets provided further support for crude prices.

“Globally, refining margins remain robust, particularly for fuel oil and distillates, with the U.S. Gulf Coast (USGC) and Northwest Europe (NEW) benefiting from heating oil demand due to the ongoing cold snap,” noted Neil Crosby, analyst at Sparta Commodities.

According to LSEG pricing data, refining margins for a typical Singapore refinery processing Dubai crude averaged $3.50 per barrel in February, up from $2.30 per barrel in January.

Uncertainty Around Chinese Demand Limits Further Gains

Despite strong refining margins and supply-side concerns, oil price gains were capped by uncertainty regarding global demand, particularly from China.

“At this stage, clear demand-side catalysts for a sustained oil rally remain uncertain. We are waiting for China’s policy announcements in mid-March, which should provide clarity on 2025 economic growth targets and stimulus measures,” said Kelvin Wong, senior market analyst at OANDA.

Trump Confirms Tariffs on Canada and Mexico, Raising Concerns for Oil Demand

On the geopolitical front, President Trump confirmed on Monday that tariffs on Canadian and Mexican imports will take effect on March 4, as originally scheduled.

Despite efforts from Canada and Mexico to negotiate exemptions, Trump insisted that the 25% tariffs on imported goods and 10% tariffs on Canadian energy exports—including oil, natural gas, and electricity—would proceed as planned.

Analysts warn that these tariffs could negatively impact global oil demand, as they may lead to slower economic growth and trade disruptions across North America.

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