Oil Prices: Facing New Market Challenges
28 March 2025 10:18
Oil prices remain at a monthly high due to expectations of a decrease in global supplies, caused by new US tariffs on oil from Venezuela and restrictions on Iranian oil.
This was reported by Reuters.
Brent oil futures fell by 14 cents (0.2%) to $73.89 per barrel, while WTI futures decreased by 12 cents (0.2%) to $69.80.
These changes are minor compared to the rise of both types of oil by more than 2% this week. Overall, prices have increased by more than 7% since the beginning of March after hitting multi-month lows.
The shift in global sanctions policy has been the main factor for this increase, analysts at BMI note.
On Monday, US President Donald Trump announced a 25% tariff on Venezuelan oil for potential buyers. This followed the imposition of sanctions on Iranian oil imports to China.
This decision has created uncertainty among buyers, leading to a halt in Venezuelan oil supplies to China, its largest consumer. Additionally, Indian company Reliance Industries plans to stop importing Venezuelan oil.
"The potential disappearance of Venezuelan supplies due to secondary sanctions, along with the threat of similar restrictions on Iranian oil, has created a noticeable shortage in the market," explained Sparta Commodities analyst June Go.
The market is also influenced by rising demand in the US, the world's largest oil consumer. American crude oil inventories fell more than expected: according to the EIA, they dropped by 3.3 million barrels to 433.6 million barrels.
However, the global oil market remains in a state of uncertainty. The active imposition of tariffs by the US on its trading partners raises concerns about an economic downturn that could impact oil demand.
As a result, analysts do not expect a prolonged increase in oil prices under current conditions.
"Although the market is experiencing a period of heightened uncertainty, we maintain our forecast for the average Brent price at $76 per barrel in 2025, below $80 per barrel in 2024," analysts at BMI noted.
Reminder:
US President Donald Trump stated that he will impose a 25% tariff on any country purchasing oil and gas from Venezuela, citing migration and criminal gang issues in the US.