Oil prices increased Thursday due to the expectations of the stricter offer after Washington imposed additional sanctions on Iranian oil trade.
In addition, some producers of organization of oil exporters have also promised more production reductions to compensate for overproduction until June 2026.
At the time of the writing of this document, the price of intermediate crude oil in western Texas on the New York Mercantile Exchange was $ 63.68 per barrel, up 1.4%.
Brent crude oil in intercontinental exchange was $ 66.61 per barrel, up 1.2% compared to the previous fence.
On Wednesday, the two benchmarks close 2% higher, reaching their highest levels since April 3.
This puts them on the right track for their first weekly increase in three weeks.
While Thursday marks the last day of settlement of the week due to the next Friday and Easter Friday holidays, investors have close surveillance.
Sanctions against Iran
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The Trump administration revealed new sanctions on Wednesday targeting Iran oil exports, with measures against a “theater” refinery in China also included.
“This decision aims to increase the pressure on Tehran in the middle of increased tensions on its nuclear program,” said FxStreet in a report.
The US Treasury Department has published a statement that the sanctions by US President Donald Trump are aimed at reducing Iran’s oil exports to zero.
The sanctions aim to dissuade Chinese Iranian oil imports as part of Trump’s “maximum pressure” campaign.
China has been the largest Iranian oil importer in the past two years.
Imports
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In addition, data from the customs authority have shown that global crude oil imports in China have increased to 12.1 million barrels per day in March.
This figure was approximately 1.7 million barrels per day more than imports in January and February, and it was almost 5% higher than imports the previous year.
Carsten Fritsch, analyst of raw materials at Commerzbank AG, said:
A sharp increase in oil imports from Iran is held responsible for this, even if China does not publish official data in this regard.
Vortexa, the Shiptracking Agency, reports that marine oil imports have experienced a significant increase, mainly fueled by Iran record expeditions to the Shandong province.
Independent Chinese refineries are suspected of having imported Iran from the perspective of the more strict American sanctions.
Trump’s sanctions against Iran occur at a time when trade tensions between the United States and China were boiling.
Experts believe that Trump sanctions have been placed to stack more misery for the Chinese economy.
Less availability of cheaper Iranian barrels on the market would increase oil competitiveness from the Middle East and Russia in the coming weeks. China is the world’s largest importer in crude oil.
OPEC remuneration plans
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Adding to the concerns about the offer, the Wednesday production remuneration plan by OPEC + supported oil prices.
OPEC announced Wednesday that it had received revised plans from member countries of Iraq and Kazakhstan, as well as other nations within the Alliance, detailing their strategies to implement additional cuts on oil production.
The OPEC updated remuneration plan increases the monthly production cuts, now ranging from 196,000 barrels per day to 520,000 barrels per day, in force this month to June 2026, the cartel said in an official statement.
The previous plan has experienced lower cuts, ranging from 189,000 barrels per day to 435,000 barrels per day.
The planned production cuts mean that the cartel’s decision to increase the production of 411,000 barrels per day in May would be largely canceled.
Eight members of OPEC + Alliance, in a surprising decision earlier this month, agreed to increase crude oil production by 411,000 barrels per day in May. This weighed feelings and oil prices slipped accordingly.
The cartel should start to relax its voluntary production reductions of 2.2 million barrels per day from April by increasing the production of 135,000 barrels per day.
The market also expected a similar increase in May.
Gains may not hold
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This week’s oil prices may not be valid because global demand should be negatively affected due to current trade tensions.
The International Energy Agency has reduced its forecast for global demand for 2025 this week, invoking concerns about American prices.
OPEC, in its monthly report, has also reduced the demand forecasts of 2025 for the first time since December. However, it was only a slight revision down compared to the IEA.
“If we see a long -term trade war until 2025, Rystad Energy projects a 15% reduction in global GDP growth by 2025 – from 2.8% to 2.4% – which would reduce our oil demand growth forecasts by 1.1 million barrels per day (BPD) to 600,000 BPD – a decrease of 50%” in Rystad.
However, we expect the corrections and disturbances of the supply, as well as the increase in energy demand during the northern hemisphere, to maintain Brent prices of around $ 70 per barrel.
