Brent Rises to $72 as US Issues Fresh Iran Sanctions

Yesterday, the US issued Iran-related sanctions, targeting entities, including for the first time, Chinese private Chinese refineries (called teapots) that are the primary purchasers of Iranian oil and vessels that supplied crude oil to such processing plants.

This could affect Iran, a member of the Organisation of the Petroleum Exporting Countries (OPEC) which produces more than 3 million barrels per day of crude oil.

China does not recognize US sanctions and is the largest importer of Iranian oil as both countries have built a trading system that uses mostly Chinese Yuan and a network of middlemen, avoiding the Dollar and exposure to US regulators.

President Donald Trump said in February he was re-imposing a “maximum pressure” campaign including efforts to drive down the country’s exports to zero.

The American President aims to stop Iran from obtaining a nuclear weapon and funding militant groups.

On the supply end, OPEC and its allies known as OPEC+ issued a new schedule for seven member nations, including Russia, Kazakhstan and Iraq to make further oil output cuts to compensate for pumping above agreed levels.

The plan will represent monthly cuts of between 189,000 barrels per day and 435,000 barrels per day, according to OPEC. The scheduled cuts last until June 2026.

Support also came as the rise in the Dollar was countered by renewed tensions in the US keeping up airstrikes on Houthi targets in Yemen in retaliation for the group’s attacks on ships in the Red Sea.

The Dollar had inched up after the Federal Reserve indicated on Wednesday it was in no rush to cut interest rates further this year due to uncertainties.

The US central bank left its key interest rate unchanged on Wednesday, a move widely anticipated by the market, but maintained its projection of two 25-basis-point rate cuts by the end of this year.

Interest rate cuts typically boost economic activity and energy demand.

The US Dollar was up 0.5 per cent, making crude more expensive for foreign buyers.

President Trump has also vowed to hold Iran responsible for future Houthi attacks while also pushing to impose tariffs on Canada, Mexico and China has raised recession fears, weighing on oil prices.