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Will U.S. Sanctions Keep the Crude Oil Market Tight?
Crude oil posted its third straight weekly gain, buoyed by intensifying U.S. sanctions on key exporters and persistent signs of tightening global supply. Despite a Friday pullback on recession concerns,
WTI ended the week up 1.6%, closing at $69.36. The primary catalyst remained Washington’s aggressive push to curb exports from Venezuela and Iran, deepening physical market constraints even as demand-side risks loom large.
How Are Sanctions on Venezuela and Iran Disrupting Global Flows?
The Trump administration’s decision to slap 25% tariffs on countries importing Venezuelan crude is starting to ripple through global trade. China, Venezuela’s top buyer, has reportedly halted purchases, while India’s Reliance Industries—the world’s largest refiner—is also scaling back.
Coupled with earlier U.S. sanctions on Iranian crude exports, these actions have effectively removed a significant volume of barrels from the market. Analysts at Barclays estimate that Venezuela’s output could drop by 200,000 bpd, a hit that tightens balances just as Iranian flows to China are being choked by freight restrictions and compliance fears.
Can OPEC+ Balance Rising Supply Risks with Output Hikes?
OPEC+ remains committed to its strategy of gradual monthly production hikes, confirming a 138,000 bpd increase starting in April, with expectations for a similar step in May. However, several members are being asked to cut production further to compensate for previous overproduction.
While this creates an impression of rising supply, the group is still withholding nearly 5.85 million bpd—around 5.7% of global supply. This restraint, paired with unexpected losses from sanctioned nations, continues to support a bullish price environment.
