Oil prices rose for a second day on Tuesday as fresh US sanctions imposed on Iran increased concerns supply might tighten and as global refining margins remained strong.
Brent crude futures rose 38 cents, or 0.5%, to $75.16 a barrel by 0401 GMT. US West Texas Intermediate crude futures gained 47 cents, or 0.7%, to $71.17 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 US sanctions announced on Iran overnight will likely assist with this as will the Iraqi oil minister’s commitment to reign in its oversupply," said IG market analyst Tony Sycamore.
The US 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 US Gulf Coast and Northwest Europe.
Margins for a typical refinery in Singapore processing regional benchmark Dubai crude averaged $3.5 a barrel in February so far, compared with $2.3 a barrel last month, LSEG pricing data showed.
However, gains overall were capped by the uncertain demand outlook.
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.
In Europe, Ukraine hosted European leaders to mark the three-year anniversary of Moscow's invasion, but US officials stayed away in an illustration of Trump's move closer to Russia.
The market has viewed Trump's warming relations with Moscow as a potential signal of an easing in the sanctions on Russia, which would add to global oil supply.
"While there are hopes of an end to the war in Ukraine, I don’t think it’s very likely under the terms that Russia and the US are pushing for and without widespread support from a revitalized Europe," said IG's Sycamore, adding the conflict could still be supportive for oil markets in the near term.
