Trump's Efforts To Neutralize Iran Oil Exports Cause Modest Price Upswing

Another round of sanctions from Washington – this time targeting Iranian interests – kindled geopolitical concerns on Thursday and as of 1613 GMT resulted in middling gains for two key crude benchmarks.

Brent was up $1.03 to $71.83 per barrel, and West Texas Intermediate rose $1.07 to $68.23.

The sanctions targeted entities including Chinese independent (aka: 'teapot') refineries and vessels supplying crude to such plants, on the grounds that China is the largest importer of oil from Iran, which produces more than 3 million barrels per day (bpd) of the commodity.

U.S. president Donald Trump's goal is to drive Iran's oil exports to zero in an effort to push the Islamic Republic to negotiate a nuclear deal, and Jorge Leon, head of geopolitical analysis at Rystad Energy, estimated that a maximum pressure campaign against Iran could remove as much as 1.5 million barrels of daily exports from global markets.

Meanwhile in the U.S., energy secretary Chris Wright told media that "We've seen a market discounting the fact that clearly it's going to be easier to produce oil and gas in the United States,…..more supply is going to come, and that's pushed down prices of oil, gasoline, home heating fuels, everything across the board, that's a win to the American people."

But Mike Wirth, CEO of Chevron, reiterated a familiar concern among energy producers by telling  delegates at a Houston conference that "Chasing growth for growth's sake has not proven to be particularly successful for our industry; at some point, you've grown enough that you should start to move towards a plateau, and you should generate more free cash flow, rather than just more barrels."

Another concern within the oil trading community on Thursday was the Organization of the Petroleum Exporting Countries (OPEC), which next month intends to start increasing production and gradually bring back 2.2 million bpd to a market that may be facing oversupply, depending on who in the analytical community is asked.

However, OPEC issued a new schedule to make further oil output cuts to compensate for pumping above agreed levels: monthly cuts of between 189,000 bpd and 435,000 bpd, according to the cartel's website, with these cuts lasting until June of 2026.

Despite all of this activity, Bloomberg noted on Thursday that "crude remains markedly below its mid-January peak, as bearish factors pressures prices."