08:35 AM EDT, 03/26/2025 (MT Newswires) -- Oil prices rose early on Wednesday after a report showed U.S. inventories fell more than expected last week, while concerns over supply strained by U.S. sanctions on Iran and Venezuela are also supporting the commodity.

West Texas Intermediate crude oil for May delivery was last seen up US$0.63 to US$69.63 per barrel, while May Brent crude was up US$0.61 to US$73.63.

In its weekly survey, the American Petroleum Institute said U.S. oil inventories fell by 4.6-million barrels last week, well more than consensus estimate for a drop of 2.5-million barrels, according to Oilprice.com. The Energy Information Administration will release official inventory data later on Wednesday morning.

The drop in U.S. inventories, a sign of strong demand, comes as the Trump Administration looks to squeeze buyers of oil from Iran and Venezuela. Fresh sanctions this month on Iran's oil exports included an independent Chinese refinery, while U.S. President Trump this week threatened to impose 25% tariffs on U.S. imports from countries buying oil from Venezuela. China is the largest buyer of oil from both Iran and Venezuela.

"Although the immediate market impact might be minimal, apart from supporting additional short covering from underinvested hedge funds, this action indicates a definite change, potentially signalling the White House's willingness to sacrifice low oil prices to achieve wider strategic objectives-isolating Iran and Venezuela and increasing pressure on China," Ole Hansen, head of commodity strategy at Saxo Bank, noted.

The upside for oil prices from the U.S. actions is likely limited by coming supply additions as OPEC+ will begin to return 2.2-million barrels per day of production cuts in 18 monthly tranches starting in April, while supply from countries outside of the cartel are also on the rise.