Oil Prices Jump on U.S. Sanctions & OPEC+ Cuts – What’s Next?
Oil prices climbed on Friday, set to close their second consecutive week of gains, as fresh U.S. sanctions on Iran and an OPEC+ plan to tighten production fueled supply concerns.
Brent and WTI crude were both on track to gain approximately 2% for the week, marking their strongest rally since early 2025.
The U.S. Treasury escalated its sanctions campaign on Thursday, targeting Chinese refineries and vessels involved in importing Iranian crude. This marks Washington’s fourth wave of restrictions since President Donald Trump pledged in February to reimpose maximum pressure on Tehran, aiming to curb Iran’s oil exports.
Analysts at RBC Capital Markets noted that while the immediate physical impact may be minimal, these sanctions could add a significant risk premium to oil prices. ANZ Bank estimates that Iranian crude exports could drop by 1 million barrels per day (bpd) due to these tightened restrictions. In February, vessel tracking data from Kpler reported Iran’s crude exports at over 1.8 million bpd.
OPEC+ Moves to Stabilize Production – Will It Work?
On Thursday, OPEC+ introduced a new plan requiring seven members to compensate for exceeding their production limits by making additional output cuts. These reductions are expected to range between 189,000 and 435,000 bpd and will remain in effect until June 2026.
The plan aims to balance previous production increases, with eight members already set to reverse some of the 5.85 million bpd in cuts enacted since 2022. However, analysts at ING remain skeptical about compliance, highlighting that certain members have repeatedly exceeded their assigned production targets.
Despite OPEC+’s efforts to regulate supply, market watchers remain cautious about whether the cuts will be fully implemented.
WTI Crude Oil Overbought: Correction Toward $67.85 & $67.36
WTI crude oil is trading at $68.28, facing resistance at $68.59 after an extended rally. Overbought conditions suggest a potential pullback, with the 23.6% Fibonacci retracement level at $68.13 already tested.
Key Support Levels: The 38.2% Fibonacci retracement level at $67.85 serves as immediate support, while further downside could see WTI testing $67.36, aligning with the 61.8% Fibonacci level and the 50-day EMA at $67.39.
Upside Potential: If WTI manages to hold above $67.85, it could consolidate before making another attempt toward $69.12.
Market Sentiment: Despite bullish momentum, traders should watch for short-term corrections before WTI resumes its uptrend.
With geopolitical tensions rising and OPEC+ supply adjustments in focus, oil prices remain volatile, making these key technical levels crucial in the coming sessions.
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