Morning Highlights: Supply Squeeze: Oil Prices Jump on Iran Sanctions, Lower U.S. Inventories (April 23, 2025)

Market Snapshot (as of 06:15 EST)

📈 Brent Crude (June): $68.24/b (+$0.84, +1.2%)

📈 WTI Crude (June): $64.50/b (+$0.83, +1.3%)

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🔹 Oil prices climb to highest since April 4

🔹 U.S. slaps new sanctions on Iranian oil shipping network

🔹 API reports steep U.S. crude stock draw

🔹 Cushing inventories at lowest since 2008

🔹 Trump softens stance on tariffs and Fed policy

🔹 IMF warns global economic slowdown likely

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Key Market Drivers

1. Fresh U.S. Sanctions on Iran Fuel Supply Concerns

•     U.S. Treasury sanctions key Iranian oil shipping magnate

•     Network allegedly responsible for hundreds of millions in LPG and crude exports

•     Supply risk re-emerges amid pressure on Iranian crude flows

2. Sharp Drop in U.S. Crude and Product Inventories

•     API data shows:

o     Crude stocks: -4.6 million barrels

o     Gasoline: -2.2 million barrels

o     Distillates: -1.6 million barrels

•     Cushing, Oklahoma storage at lowest since 2008

•     Suggests seasonal demand pickup and tight market conditions

3. Market Tightness Now, But Surplus Expected Later

•     Global crude and condensate supply running ~400,000 bpd below demand this month

•     Tight inventories contrast with expectations of 2025 surplus, driven by:

o     OPEC+ output increases

o     Weaker demand projections from IMF, IEA, OPEC

4. Trump Eases Pressure on Fed, Signals Tariff Flexibility

•     No longer threatening to fire Fed Chair Powell, amid criticism over interest rates

•     Hints at lowering tariffs on Chinese imports

•     Treasury Secretary Bessent sees potential de-escalation, but warns talks will be a “slog”

5. IMF Warns of Economic Headwinds

•     IMF signals slowdown in global economic output

•     Says tariffs are beginning to bite across multiple economies

•     Weighs on long-term oil demand outlook despite current tightness

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🔍 Market Outlook: Short-Term Tightness vs. Long-Term Caution

🔹 Key Factors to Watch: ✅ Will U.S. crude inventories confirm API draw in EIA report?

✅ Will Trump follow through on tariff relief?

✅ Will Iran sanctions materially curb supply flows?

✅ Can Cushing levels stay low into May?

✅ When will traders begin to price in OPEC+ supply hikes?