Trump Sanctions Against Iran Gain Traction, Oil Headed For Second Weekly Rise

Meanwhile, India dependence on crude imports grows: File Image/Pixabay

For all the hype about oversupply concerns, crude traders suddenly concerned about tight inventories were responsible on Friday for propelling two key benchmarks to a second consecutive week of gains, although Friday's gains were minuscule.

Based on U.S. president Donald Trump's imposition of new sanctions targeting Iran's ability to export oil, Brent settled up 16 cents at $72.16 per barrel, and West Texas Intermediate settled up 21 cents to $68.28.

ANZ expected a 1 million barrels per day (bpd) reduction in Iranian exports because of the latest sanctions, which target Iranian crude going to China and are the fourth round of sanctions since Trump in February vowed to drive the Islamic republic's oil exports down to zero.

Also said to have influenced Friday's crude trading 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 but in the previous session issued a new schedule to make further oil output cuts to compensate for pumping above agreed levels: monthly cuts of between 189,000 barrels per day and 435,000 bpd, with these cuts lasting until June of 2026.

Steven Innes, managing partner at SPI Asset Management, said, "Oil is caught in a tug-of-war between geopolitical tailwinds and macroeconomic headwinds; geopolitical risk has taken center stage again, injecting a risk premium, even if it's small, and sparking a rally in crude as some shorts get covered and others hedge for potential supply shocks."

However, Innes added that the "macro backdrop is still murky; markets are keeping their eyes fixed on Ukraine ceasefire talks and watching how China's stimulus affects its economy."

For its part, Bloomberg observed that crude was being weighed down "by macroeconomic concerns over slower economic growth and its impact on oil demand, reflecting an increasingly bearish long-term outlook that also dragged on equities."

Meanwhile, countries that are, by contrast, facing robust demand, such as India, are also exhibiting an unusual dependence on others for crude imports while domestic crude production remains flat.

According to India's oil ministry data, India imported 88.2 percent of the crude it consumed in the April 2024-February 2025 period, meaning dependence has increased from 87.7 percent in the same period of the 2023/2024 fiscal year.

In the near term, Indian refiners are seeking funding to build new refineries; however, the country remains vulnerable to oil price shocks as its need for imported crude continues to grow.