Oil Climbs for Second Week Amid Sanctions, OPEC+ Plan to Tighten Supply

Oil prices edged higher on Friday, securing a second straight week of gains as tighter supply expectations took hold, driven by fresh U.S. sanctions on Iran and OPEC+’s latest production strategy. Brent crude futures climbed 16 cents, or 0.2%, to settle at $72.16 per barrel, while U.S. West Texas Intermediate crude rose 21 cents, or 0.3%, to $68.28. Over the week, Brent posted a 2.1% increase and WTI gained 1.6%, marking their strongest weekly performance since early January. The rally reflects growing market confidence that supply constraints are on the horizon, fueled by geopolitical moves and production adjustments, even as demand dynamics remain under scrutiny.

The U.S. recently imposed new sanctions on Iran, targeting entities involved in shipping its crude, including—for the first time—an independent Chinese refiner. This escalation, the fourth round since February under a “maximum pressure” policy aimed at slashing Iran’s oil exports to zero, signals that even China, the top buyer of Iranian crude, isn’t beyond Washington’s reach. Analysts suggest this could rattle the market, with projections of a 1 million barrel per day (bpd) drop in Iranian exports, especially as February estimates pegged shipments above 1.8 million bpd. The heightened sanctions are expected to make shippers warier, tightening the global oil supply further and lending support to prices.

OPEC+ also bolstered the bullish sentiment with a new plan unveiled this week. Seven member countries agreed to deepen output cuts—ranging from 189,000 to 435,000 bpd monthly through June 2026—to offset prior overproduction. While the group confirmed that eight members will increase output by 138,000 bpd starting in April, reversing a portion of the 5.85 million bpd cuts in place since 2022, the compensatory reductions are seen as capping near-term supply growth. However, skepticism lingers, with market watchers awaiting evidence that countries like Iraq, Kazakhstan, and Russia—where Kazakhstan’s output hit a record high in March—will adhere to the pledged cuts. Together, these developments paint a picture of a constricting oil market, propelling prices upward as supply-side pressures mount.