Oil prices rose on April 17 due to US sanctions on Iran and a promise by some OPEC producing countries to cut production to compensate for the pumping out of previously agreed quotas.
Points of attention
- Oil prices have surged as a result of US sanctions on Iran and OPEC's decision to cut production to offset overproduction.
- Short positions, a weakened US dollar, and pressure on Iran have further fueled the increase in oil prices.
- Despite the current upward trend, uncertainties loom over the sustainability of the price surge as challenges in the global trade landscape persist.
Oil prices have risen
Brent crude futures rose 55 cents, or 0.8%, to $66.40 a barrel. U.S. West Texas Intermediate crude was at $63.13 a barrel, up 66 cents, or 1.1%.
Both benchmarks settled 2% higher on Wednesday at their highest levels since April 3 and are on track for their first weekly gain in three weeks. Thursday is the last trading day of the week before Good Friday and Easter.
"I believe there are several factors behind the rise — short covering, a weaker US dollar making crude cheaper to buy, and US pressure on Iran," said IG market analyst Tony Sycamore.
He added that WTI could return to $65-67 per barrel but may have trouble rising further.
On April 16, the administration of President Donald Trump announced new sanctions against Iranian oil exports, including against a refinery in China, increasing pressure on Tehran amid talks to escalate the country's nuclear program.
In addition, the Organization of the Petroleum Exporting Countries (OPEC) said on Wednesday that it had received updated plans for Iraq, Kazakhstan and other countries to further cut production to compensate for exceeding quotas.
A draw in US gasoline and distillate inventories and a smaller-than-expected build in weekly crude oil inventories also supported markets.
OPEC, the International Energy Agency and several banks including Goldman Sachs and JP Morgan lowered their forecasts for oil prices and demand growth this week as U.S. tariffs and retaliation from other countries wreaked havoc on global trade.
The World Trade Organization said it expects merchandise trade to contract by 0.2% this year, compared with October expectations of growth of 3.0%.
