Oil Market Rises on Fresh Iran Sanctions, Iraq’s Overcompensation Remedy

Brent crude futures were up by 45 cents or 0.6 per cent to $74.88 per barrel during the session as the US West Texas Intermediate (WTI) crude futures grew by 43 cents or 0.6 per cent to $70.83 a barrel.

The US imposed a fresh round of sanctions on Iran’s oil industry yesterday, hitting more than 30 brokers, tanker operators, and shipping companies for their role in selling and transporting Iranian petroleum.

The Treasury Department said the new sanctions target oil brokers in the United Arab Emirates and Hong Kong, tanker operators and managers in India and China, the head of Iran’s National Iranian Oil Company, and the Iranian Oil Terminals Company.

The announcement came as the US President, Mr Donald Trump, seeks to bring Iran’s crude exports to zero to prevent the country from obtaining a nuclear weapon, and builds on the layers of sanctions already imposed by his government and the previous Biden administration.

The Iranian Oil Terminals Company oversees all operations at Iran’s oil terminals, including Kharg Island Oil Terminal, through which a majority of Iranian oil flows, and South Pars Condensate Terminal, which accounts for 100 per cent of Iran’s gas condensate exports.

Also, Iraq reaffirmed its commitment to the  agreement of the Organisation of the Petroleum Exporting Countries (OPEC) on Monday.

The second largest producer in the cartel said it would present an updated plan to compensate for any overproduction in previous periods.

Iraq said it will continue its efforts to compensate the accumulated overproduction while taking into account an anticipated handover of oil for export from the Kurdistan Regional Government (KRG).

OPEC and its allies, OPEC+ is set to begin scheduled supply increases in April. The alliance is
currently cutting output by 5.85 million barrels per day, which is about 5.7 per cent of global supply, agreed in a series of steps since 2022.

The market will continue to observe talks to end the Ukraine war which could allow more Russian oil onto the market.

Also, a set of US tariff measures might weigh on economic activity and crude oil demand.

President Trump said on Monday that the US is close to a minerals deal with Ukraine after he held talks with French President Emmanuel Macron that covered the prospects for ending the Ukraine war despite stark differences on how to proceed.