21 Mar 2025

WTI prices are rising in response to newly imposed sanctions on Iran that affect an independent Chinese refiner. Additionally, oil prices may receive further backing as OPEC+ introduces a new production cut strategy involving seven member countries. The geopolitical risk premiums associated with oil are also on the rise due to Israel's initiation of a new ground operation in Gaza.  

West Texas Intermediate (WTI) crude oil is holding steady for the third consecutive session, trading at approximately $68.40 per barrel during the Asian trading hours on Friday. The oil market is on track for its second weekly gain, largely influenced by the recent sanctions imposed by the United States on Iran.  

On Thursday, the US Treasury announced new sanctions targeting an independent Chinese refiner, along with other entities and vessels engaged in the supply of Iranian crude oil to China. Analysts from ANZ Bank, as reported by Reuters, predict a decline of 1 million barrels per day (bpd) in Iranian crude exports due to these stricter sanctions. Meanwhile, vessel tracking service Kpler reported that Iran's crude exports surpassed 1.8 million bpd in February, although they cautioned that sanctions might obscure the true figures.  

Furthermore, oil prices could receive additional support as OPEC+, which includes the Organization of the Petroleum Exporting Countries and its allies, implements a new production cut plan for seven member nations, aiming to reduce output by 189,000 to 435,000 bpd each month until June 2026. While Kazakhstan, Iraq, and Russia are expected to participate in these cuts, plans for increased production next year may mitigate their effects.  

Earlier this month, OPEC+ confirmed that eight of its members would raise output by 138,000 bpd per month starting in April, reversing part of the 5.85 million bpd in production cuts that have been gradually enacted since 2022 to stabilize the market.  

Geopolitical risk premiums continue to support oil prices, particularly following Israel's launch of a new ground operation in Gaza, while the US maintains its air operations in the region.