Sanctions against Iran and OPEC’s new plans: oil rises in price for the second week in a row
21 March 2025 12:16
Oil prices rose on Friday, as new US sanctions against Iran and OPEC’s latest production cut plan raised expectations of a supply reduction. This was reported by "Komersant Ukrainian" reports with reference to Reuters.
As of eleven am in Kyiv, the price of Brent crude oil futures rose by 12 cents, or 0.2%, to $72.12 per barrel. Futures for West Texas Intermediate (WTI) rose 15 cents, also 0.2%, to $68.22.
The weekly gain for both Brent and WTI is thus set to reach 1%, which is their largest increase since the beginning of the year.
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US vs Iran
On Thursday, the US Treasury Department announced new sanctions against Iran, which for the first time affected an independent Chinese refinery and other entities and vessels involved in the supply of Iranian oil to China.
These sanctions, together with OPEC’s promise to compensate for excess production, were the catalyst for the surge in oil prices on Thursday, said PVM analyst Tamas Varga.
The announcement of the sanctions was the fourth round of restrictions against Iran by Washington after US President Donald Trump promised “maximum pressure” on Tehran in February and pledged to reduce Iran’s oil exports to zero.
Analysts at ANZ Bank expect Iranian oil exports to decline by 1 million barrels per day due to tighter sanctions. According to ship tracking service Kpler, Iranian oil exports exceeded 1.8 million barrels per day in February. This means that Iranian exports are expected to fall by more than half.
OPEC
Oil prices also reacted to OPEC’s new plans to cut production by seven more member countries to compensate for overproduction. The plan provides for monthly production cuts of 189,000 to 435,000 barrels per day until June 2026.
At the same time, this month OPEC confirmed that its eight members will implement a monthly production increase of 138,000 barrels per day from April, canceling part of the 5.85 million barrels per day production cut agreed in a series of steps from 2022 to support the market.
“Although the group has developed a plan for compensatory cuts, this does not mean that members will necessarily comply with it. Several members have consistently produced more than their targets,”
– ING analysts said in a note on Friday.
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