Mar 21, 2025 (MarketLine via COMTEX) --
During the past week, crude oil prices experienced a notable uptick following the US imposed new sanctions on crude oil imports from Iran. This upward trend in prices was further supported by escalating tensions in the Middle East, as the US initiated airstrikes in Yemen to neutralize the Houthi threat to maritime trade in the Red Sea, while Israel recommenced attacks in Gaza. In addition, a subset of OPEC+ nations consented to a voluntary reduction in their crude oil production after exceeding their output quotas, which contributed to the further increase in oil prices during the week. Nevertheless, the gains in prices were somewhat mitigated by emerging signs of a resolution to the prolonged conflict between Russia and Ukraine. Following telephonic negotiations between the US and Russia, the two nations reached an agreement to safeguard energy infrastructure from military actions for a 30-day period while they pursue discussions toward a comprehensive ceasefire.
Some key factors that led to changes in crude oil prices this week are as follows:
Oil prices grew on Monday, supported by simmering tensions in the Middle East after the US struck Houthi strongholds in Yemen. The US later blamed Iran for arming the Houthis and stated that its precision strikes would continue until the attacks on commercial ships along the Yemeni coastline stopped completely. Oil prices dipped on Tuesday, weighed down by growing signs of Ukraine and Russia achieving a ceasefire after positive discussions between President Putin and US President Trump. Prices were also weighed down by OPEC’s outlook of a potential decline in the global oil consumption in 2025 due to the likely impact of US tariffs on global economic growth. However, the fall in prices was somewhat contained by renewed tensions in Gaza after Israel ended the ceasefire and bombed several localities after negotiations with Hamas over releasing the remaining hostages yielded no results. Besides, a crude supply disruption from OPEC producer Nigeria also limited the downside to prices. This was after an oil pipeline, the Trans Niger, that can carry 450,000 barrels per day (bpd) of crude, burst following an explosion and hampered the supplies. Oil prices rose slightly on Wednesday, supported by rising tensions in the Middle East after Israeli armed forces entered central and southern Gaza to undertake ground operations, a day after conducting aerial strikes. Prices also received support from a weekly fall in the US gasoline and distillate stockpiles. According to the US Energy Information Administration (EIA), gasoline inventory was down by 500,000 barrels while distillate stocks fell by 2.8 million barrels during the week ending on March 14, 2025. Besides, the US Federal Reserve kept the benchmark interest rates unchanged citing highly uncertain economic outlook, which somewhat eroded the gains in prices. Elsewhere, the upside to prices was also restrained after Russia and Ukraine reached a preliminary 30-day truce. This deal, which is the first phase of the broader ceasefire agreement that is in the works, involves a halt in attacks on each other's energy infrastructure. Oil prices gained on Thursday and then rose slightly on Friday, supported by prospects of tightening sanctions on Iran and its likely impact on global trade and geopolitics. In a new directive, the US sanctioned several Iran’s partners, who procure crude oil from Iran. This included oil tankers shipping Iranian oil and, in a first, an independent downstream company from China, Shandong Shouguang Luqing Petrochemical Company. Prices also received support from rising tensions in the Middle East after the US continued to conduct air strikes at Houthi bases in Yemen. Besides, prices were also buoyed by signs of reduced crude oil supply from some members of the OPEC+ group, including Iraq, Kazakhstan and Russia. These countries agreed to slash their crude oil output in the range of 189,000 barrels per day (bpd) to 435,000 bpd, beyond the stipulated quotas till June 2026, to compensate for overproduction in the past.
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COMTEX_464017704/2227/2025-03-28T05:05:37
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