Oil prices saw a significant increase of more than 4% over the past week. This recovery began on April 9, driven by the postponement of tariffs. Despite this rise, prices remain below their key levels, raising questions about the sustainability of this recovery.
Technical Analysis of Current Prices
Brent crude remains below $71, which has been strong support for two years. This level may now turn into difficult resistance. Similarly, West Texas Intermediate crude is holding below $66, where buying has contributed to its stability for four consecutive years. This suggests that the market may struggle to surpass these levels without strong catalysts.
Impact of OPEC+ Decisions on the Market
In April, OPEC+ launched a massive sell-off due to concerns about tariffs. In addition, the cartel raised production quotas and reduced selling prices to Asia. This shift in tactics indicates a greater focus on market share rather than targeting prices.
US Production Decline
US production has declined, with average production rates falling below 13.5 million barrels per day. This decline follows peaks of 13.6 million barrels per day for most of March. The number of oil rigs has also fallen to between 480 and 481 over the past two weeks. This decline could continue if prices continue to decline, reducing the attractiveness of upstream investment.
At current levels, there is room for a slight 2-3% rise in oil prices. However, a return to the bull market will only be confirmed if prices continue to rise above the 50-week moving average. This average is currently $72 for West Texas Intermediate and $76 for Brent. If prices can break above these levels, it could indicate a sustained upward trend.
Bearish Influencing Factors
Bearish factors remain strong, as markets are under pressure from the shock of tariff wars. These wars are suppressing business activity and slowing energy consumption growth. In addition, geopolitical tensions could increase market uncertainty, negatively impacting oil prices.
The Impact of Lower Prices on Exploration and Production Companies
US exploration and production companies may reduce the number of drilling rigs to 100 as oil prices fall. Private operators are likely to allow rigs to come online first, starting in the Midcontinent and Powder River basins, followed by Eagle Ford, Bakken, and Permian. This move is in response to the recent drop in the price of West Texas Intermediate (WTI) crude oil to $62 per barrel.
JP Morgan and Truist Securities Analysis
According to a new analysis by JPMorgan Securities, at least 50 to 100 of the approximately 600 drilling rigs in the United States could be idle. This idling is a response to lower prices. Production could soon be reduced, according to Truist Securities. Neil Dingman, an analyst at Truist, reported that their conversations with several exploration and production companies indicate that cuts are likely to occur soon if WTI crude oil prices remain close to $60 per barrel for several days.
Oil prices rose to their highest levels in two weeks on Thursday after the United States imposed new sanctions targeting Iranian oil exports, raising concerns about global supplies.
Washington announced new sanctions targeting Chinese companies importing Iranian oil, heightening geopolitical tensions and sending oil prices up about 2%, with Brent crude reaching $66.40 per barrel and WTI crude reaching $63.13 per barrel, their highest levels since April 3.
Oil prices rise to their highest levels in two weeks as geopolitical tensions escalate.
This coincided with the announcement by some OPEC members of additional production cuts, which contributed to supporting prices. However, analysts expressed mixed expectations regarding the continuation of this trend, noting that slowing economic growth in the United States and China could limit demand for oil.
Oil prices witnessed a significant increase on April 17, 2025, with West Texas Intermediate (WTI) crude reaching $64.45 per barrel, while Brent crude reached $67.85 per barrel, according to Armenpress reports. This increase came amid the imposition of new US sanctions targeting Iranian oil exports, raising concerns about global supplies.
US Sanctions and Their Impact on the Market:
The United States imposed additional sanctions on companies and vessels facilitating Iranian oil exports, including an independent Chinese refinery accused of purchasing more than $1 billion in Iranian oil. These measures aim to reduce Iran’s oil revenues, which are used to finance its nuclear and regional activities. International Reactions:
China, the largest importer of Iranian oil, expressed its rejection of US sanctions, affirming its continued dealings with Iran using a yuan-based trading system to avoid US oversight. In return, the United States affirmed its determination to fully implement the sanctions to prevent Iran from developing nuclear weapons.
Impact of Sanctions on Oil Prices:
The new sanctions have increased concerns about oil supplies, pushing prices higher. Geopolitical tensions have also contributed to this trend, as investors fear the impact of these sanctions on market stability. Between the recovery and the challenges, the oil market remains in a state of anticipation. Recent movements point to the possibility of future increases, but bearish factors remain. Continued monitoring of economic and political developments will be essential to understand future market trends.
