Oil prices rose on Friday, with Brent and West Texas Intermediate crude futures rising for the second consecutive week. Multiple factors drove this increase, most notably the imposition of new US sanctions on Iran and the new OPEC+ plan to cut production, which strengthened expectations of tighter supplies.
OPEC+ Pledges to Compensate for Overproduction
On the other hand, oil prices were also supported by the recently announced new OPEC+ plan. This plan includes additional production cuts by seven OPEC+ members to compensate for their overproduction. The plan calls for monthly cuts ranging from 189,000 to 435,000 barrels per day until June 2026.
These production adjustments aim to stabilize the market and ensure supply balance amid global challenges. OPEC+ confirmed this month that eight of its members will continue to increase their production by 138,000 barrels per day (bpd) each month starting April 2025. These steps are part of OPEC+’s commitment to the production cuts agreed upon in 2022 to support market stability.
Varying adherence to OPEC+ plans
Although the OPEC+ group agreed on a plan to reduce compensation for overproduction, it does not appear that all members will fully implement it. Reports indicate that some members have continued to produce above their target levels. This reflects the gap between the group’s overall direction and individual member country commitments, which could affect the plan’s effectiveness in controlling production levels.
These discrepancies could lead to volatility in oil markets, further complicating forecasts of short-term price stability. Meanwhile, global markets remain uncertain due to the potential repercussions of these policies on global oil markets.
Weekly gains in oil prices
Regarding the weekly trend, Brent and West Texas Intermediate (WTI) crude futures posted their second consecutive weekly gain. Brent crude futures rose 12 cents, or 0.2%, to $72.12 per barrel. WTI crude futures also rose 15 cents, or 0.2%, to $68.22 per barrel.
These weekly gains represent the largest gains since the beginning of the year, reflecting the direct impact of several key market factors, including US sanctions, OPEC+-led production cuts, and expectations of stable supplies.
Oil Price Outlook
Given the current situation in the oil markets, many analysts expect oil prices to continue rising in the short term. US sanctions on Iran continue to increase pressure on supplies, which could reinforce the upward trend in prices in the coming period. In addition, expectations indicate that OPEC+ will continue its policy of production cuts, which will increase pressure on oil prices.
However, there are also some concerns that may affect these expectations. Among these concerns is the slowdown in global economic growth, especially in some major economies such as China and the European Union. If these concerns continue to escalate, this could lead to reduced demand for oil, which could hinder continued price increases.
The Role of US Sanctions in Changing Oil Market Dynamics
US sanctions have long played an important role in shaping oil market dynamics. By imposing these sanctions on Iran, the United States seeks to reduce Tehran’s ability to export oil, which could impact global oil supplies. This, of course, reflects the strong political and economic tensions between the world’s major powers.
Uncertainty will continue to dominate oil markets in the short term.
On the other hand, these sanctions may be an effective means of pushing Iran to change its economic policies or strategies. However, the impact of these sanctions on global markets cannot be viewed in isolation; these effects are intertwined with other factors that control oil markets. The oil market is currently experiencing volatility driven by several key factors, most notably US sanctions on Iran and OPEC+ decisions regarding production cuts. These factors have pushed oil prices to achieve weekly gains for the second consecutive week, reflecting the impact of these policies on market stability.
However, uncertainty will continue to dominate oil markets in the short term, as prices may experience volatility due to concerns about slowing economic growth in some countries, in addition to the challenges OPEC+ may face in implementing its production policies. Therefore, it will be essential to monitor developments in global political.
These sanctions are part of the ongoing efforts by the United States to reduce Iranian oil exports. They were a major factor contributing to the rise in oil prices on Thursday. The sanctions also played a significant role in supporting prices due to concerns they have raised about restricting global supplies.
Analysts at ANZ Bank expect Iranian oil exports to decline by 1 million barrels per day as a result of the tightening of sanctions. Iranian oil exports are estimated to have exceeded 1.8 million barrels per day in February. US President Donald Trump promised in February to exert “maximum pressure” on Tehran. He pledged efforts to reduce Iran’s oil exports to zero, which is in line with his policies of economic pressure on the Iranian regime. These measures are expected to have an impact on global oil markets, including the potential for higher prices if Iran continues to reduce its production and exports.
