Oil prices saw an upward movement on Friday following the imposition of new U.S. sanctions on Iran’s crude exports, yet they remained on track for a third consecutive week of decline.
The downward trend has largely been attributed to ongoing concerns regarding global demand, exacerbated by the U.S.-China trade war and uncertainty surrounding potential new tariffs on other nations.
Brent crude futures rose by 51 cents, or 0.7%, reaching $74.80 per barrel by 1200 GMT. However, they were still on course for a weekly drop of 2.6%.
On Thursday, the U.S. Treasury Department unveiled fresh sanctions against individuals and tanker operators involved in the export of millions of barrels of Iranian crude oil to China.
Market analysts indicate that the sanctions could significantly impact global supply dynamics. Michael Haigh, global head of commodities research at Societe Generale, stated that these sanctions could cut Iran’s exports by half, leading to further market volatility.
New U.S. Sanctions Target Iranian Crude Exports
While the new sanctions are bullish for oil prices, concerns over global demand remain prevalent.
The intensifying U.S.-China trade conflict, alongside new tariff threats on Mexico and Canada, has weighed on oil demand and influenced investor sentiment.
“The imposition of tariffs and pauses should be bullish for the oil market because they create uncertainty. “Trade tensions and retaliatory tariffs negatively impact global GDP, which in turn affects consumption.”
Analysts at BMI Research also echoed similar concerns, stating:
“Oil prices remain under pressure due to the uncertainty surrounding trade negotiations.
The fear of a prolonged economic downturn has fueled apprehensions about a potential decline in global consumption.”
Further compounding the issue, President Donald Trump reiterated his commitment to increasing U.S. oil production, which has further weighed on market sentiment.
U.S. Crude Inventories Surge, Pressuring Prices
One of the key drivers contributing to downward pressure on oil prices has been the unexpected increase in U.S. crude inventories.
Data released this week showed a sharp rise in stockpiles, leading to concerns about oversupply.
The jump in U.S. crude reserves coincided with refinery maintenance season, which led to a temporary slowdown in crude processing capacity.
“The oil market remains fragile due to supply-side pressure. Rising U.S. crude production, coupled with trade war concerns, has limited the potential upside for oil prices,” noted an industry expert.
