Oil prices climbed more than 1% on Wednesday, extending the prior day's gains, as investors weighed a fresh round of U.S. sanctions on Iran, a drop in U.S. crude stocks and a softer tone from President Donald Trump towards the Federal Reserve.

Brent crude futures climbed $1, or 1.5%, to $68.44 a barrel at 0640 GMT, while U.S. West Texas Intermediate crude was up 99 cents, or 1.6%, at $64.66 a barrel.

The U.S. issued new sanctions targeting Iranian liquefied petroleum gas and crude oil shipping magnate Seyed Asadoollah Emamjomeh and his corporate network on Tuesday.

Emamjomeh's network is responsible for shipping hundreds of millions of dollars' worth of Iranian LPG and crude oil to foreign markets, the U.S. Treasury said in a statement.

"The U.S. issued fresh sanctions targeting Iranian energy supplies, which worried markets," said senior market analyst Priyanka Sachdeva at Phillip Nova.

Both benchmark prices this morning were also backed by hopes of a positive outcome between the U.S. and China over import tariffs, Sachdeva said.

Trump on Tuesday backed away from the threat of firing Fed Chair Jerome Powell after days of criticism for the Fed not cutting interest rates. Trump also signalled the possibility of lower tariffs on Chinese imports.

Meanwhile, U.S. crude oil inventories fell by around 4.6 million barrels last week, market sources said on Tuesday citing American Petroleum Institute data. [API/S]

U.S. government data on oil stockpiles is due at 10:30 a.m. ET (1430 GMT) on Wednesday. Analysts on average estimated an 800,000 barrel decline in U.S. crude oil stocks last week, a Reuters poll showed. [EIA/S].

Source: Investing.com