Oil Posts Weekly Gain On Trade Deal Hopes, New Iran Sanctions
Oil prices closed more than 3% higher on Thursday, supported by hopes for a trade deal between the United States and the European Union and new U.S. sanctions to curb Iranian oil exports, which have raised supply concerns.
Brent crude futures settled up $2.11, or 3.2%, at $67.96 a barrel, and U.S. West Texas Intermediate crude rose $2.21, or 3.54%, to $64.68 a barrel.
For the week, both Brent and WTI are up about 5%, their first weekly gains in three weeks. Thursday was the last settlement day for the week ahead of the Easter holiday and trading volumes were thin.
U.S. President Donald Trump and Italian Prime Minister Giorgia Meloni met in Washington and expressed optimism about resolving trade tensions that have strained U.S.-European relations.
"We're not going to have much trouble making a deal with Europe or anybody else, because we have something that everybody wants," Trump said.
Reaching a trade deal with the EU could potentially limit the drop in oil demand from Trump’s tariffs, said Bob Yawger, director of energy futures at Mizuho.
The Trump administration’s sanctions on Wednesday, including on China-based “teapot” refineries, ratchet up pressure on Tehran amid talk of the country’s nuclear program. “Tepot” is an industry term for small, independent, simple refineries.
“These are very broad sanctions, with a focus on Chinese teapot refineries,” said John Kilduff, a partner at Again Capital. “This is a potential supply drain for the market.”
Washington also imposed additional sanctions on several companies and vessels it said were responsible for facilitating shipments of Iranian oil to China as part of Iran’s shadow fleet. “The U.S. continues to aggressively sanction Iran and impose sanctions on buyers of Iranian oil. OPEC+ has also provided updates and reassurances to the market, stating that they remain in control with the flexibility to cut production if needed,” analysts at energy consultancy Gelber and Associates said in a note.
The Organization of the Petroleum Exporting Countries said on Wednesday it had accepted the latest plan for Iraq, Kazakhstan and other countries to make further production cuts to compensate for pumping above quota.
However, OPEC, the International Energy Agency and several banks, including Goldman Sachs and JPMorgan, cut their forecasts for oil prices and demand growth this week as U.S. tariffs and retaliation from other countries upended global trade.
Source: Investing.com
