Oil prices are hovering at a monthly high as expectations of a decline in global supply grow following the US imposition of tariffs on countries purchasing oil from Venezuela and restrictions on Iranian oil trade.
According to Reuters, Brent crude futures fell by 14 cents (0.2%) to $73.89 per barrel, while US WTI futures decreased by 12 cents (0.2%) to $69.80.
However, these changes are minimal compared to the more than 2% increase seen in both contracts this week. Overall, since early March, prices have risen over 7% after hitting a multi-month low.
The primary driver for this increase has been the shift in global sanction policies regarding oil, analysts at BMI noted.
On Monday, US President Donald Trump announced a 25% tariff on potential buyers of Venezuelan oil. This followed recent sanctions imposed by the US against Iranian oil imports into China.
This decision has created uncertainty among buyers, leading to a halt in Venezuelan oil shipments to China, its largest consumer. Furthermore, sources indicate that Indian company Reliance Industries, which operates the world's largest oil refinery, plans to cease importing Venezuelan oil.
“The potential disappearance of Venezuelan supplies due to secondary sanctions, along with the threat of similar restrictions on Iranian oil, has created a significant market deficit,” explained analyst Jun Go from Sparta Commodities.
The market has also been affected by rising demand in the US, the world's largest oil consumer. American crude oil inventories fell more than expected: according to the Energy Information Administration (EIA), they dropped by 3.3 million barrels to 433.6 million barrels.
However, on a global scale, the oil market remains uncertain. The active imposition of tariffs by the US against its trading partners raises concerns about an economic downturn that could affect oil demand.
As a result, analysts do not foresee a prolonged increase in oil prices under current conditions.
“While the market is experiencing a period of heightened uncertainty, we maintain our forecast for the average Brent price at $76 per barrel in 2025, which is lower than the $80 per barrel forecast for 2024,” noted BMI analysts.
Reminder:
US President Donald Trump stated that he would impose a 25% tariff on any country purchasing oil and gas from Venezuela, citing migration and the presence of criminal gangs in the US.