Oil prices rose more than $1 a barrel on Tuesday as fresh U.S. sanctions on Iran and a rally in equities helped fuel a recovery rally from the previous session's sharp selloff.

Brent crude rose $1.18, or 1.8%, to settle at $67.44 a barrel. The U.S. West Texas Intermediate crude contract for May, which expires on Tuesday, rose $1.23, or 2%, to settle at $64.32.

The more actively traded June WTI contract also rose 2% to settle at $63.47.

The U.S. on Tuesday imposed new sanctions targeting the liquefied petroleum gas kingpin and Iran's crude oil shipments and its network of companies. Although talks between Washington and Tehran over Iran's nuclear program progressed over the weekend, failure to reach a deal could weigh heavily on Iran's oil exports amid tightening U.S. sanctions, said John Kilduff, a partner at New York-based Again Capital.

"Either the nuclear deal is approved or the U.S. tries to drive Iranian oil flows to zero, and that's looking more and more like a zero-flow scenario," Kilduff said.

A surge in equity markets, indicating higher risk appetite among investors, also helped oil prices, said Mizuho analyst Robert Yawger.

U.S. stocks rose on Tuesday as investors focused on corporate earnings, a day after President Donald Trump's escalating criticism of Federal Reserve Chairman Jerome Powell led to a sharp selloff.

Benchmark Brent and WTI prices fell more than 2% on Monday on progress in U.S.-Iran talks and a selloff in equities. Despite Monday's recovery, investors remain concerned that U.S. tariffs could cut global economic activity, which would weigh on oil prices going forward.

The International Monetary Fund on Tuesday cut its economic outlook for this year, citing U.S. tariffs at a 100-year high and rising trade tensions between Washington and Beijing.

"(The US tariffs) risk slowing global trade, disrupting supply chains and raising costs across key energy-consuming industries - all of which could significantly reduce demand for oil," said Marcus McGregor, head of commodity research for asset management firm Conning.

US Treasury Secretary Scott Bessent told investors on Tuesday he was confident trade tensions between the US and China would ease, but that talks with Beijing had not yet begun and would be a "difficult process".

Meanwhile, Russia's economy ministry cut its forecast for the average price of Brent crude in 2025 by almost 17% from its projection in September, according to a document seen by Reuters. US crude inventories are expected to have fallen last week, according to a Reuters poll on Tuesday. (Newsmaker23)

Source: Reuters