Oil Prices Rise on New Sanctions Against Iran and Iraq’s OPEC+ Commitment

Oil Prices Rise on New Sanctions Against Iran and Iraq’s OPEC+ Commitment


Oil prices saw an upward movement on Monday due to newly imposed U.S. sanctions on Iran and Iraq’s renewed commitment to the OPEC+ agreement. These factors have raised concerns about near-term supply tightness, helping the market recover from Friday’s significant losses. Brent crude futures rose by 35 cents, or 0.5%, to settle at $74.78 per barrel, while U.S. West Texas Intermediate (WTI) crude futures gained 30 cents, or 0.4%, to settle at $70.70 per barrel. On Friday, Brent recorded its lowest close since February 6, and WTI had its lowest settlement so far this year.

The U.S. Treasury introduced a fresh round of sanctions targeting Iran’s oil industry, affecting brokers, tanker operators, and shippers involved in the sale and transport of Iranian petroleum. This development, combined with Iraq’s reaffirmed commitment to the OPEC+ supply agreement, contributed to the modest increase in oil prices. Despite this, Iranian crude oil exports remain elevated, and it remains to be seen if the sanctions will significantly impact exports.

Iraq announced plans to present an updated strategy to compensate for any overproduction of its OPEC+ quotas in recent months. The Iraqi oil ministry stated that it would export 185,000 barrels per day from Kurdistan’s oilfields through the Iraq-Turkey pipeline once shipments resume. Oil prices were expected to recover after the previous session’s steep selloff, driven by expectations of the resumption of northern Iraqi exports and the potential end of the war in Ukraine, which had pulled benchmarks over $2 lower.

The market structure is also signaling near-term supply tightness, with the premium of front-month Brent futures over the next month’s contract at its highest since February 11, having steadily climbed over the past week. However, some analysts cautioned that oil prices could remain under pressure from ongoing talks to end the Ukraine war, which might result in more Russian oil entering the market, and various U.S. tariff measures that could negatively impact economic activity and crude oil demand.

On Monday, U.S. President Donald Trump mentioned that the U.S. is close to finalizing a minerals deal with Ukraine during talks with French President Emmanuel Macron. Despite differences on how to end the Ukraine war, Trump assured that the U.S. is “on time” with tariffs against Canada and Mexico, addressing the upcoming end of a pause on such actions next week.