NEWS

Oil prices saw a significant rise on Thursday, March 20, with prices climbing by more than $1 per barrel upon settlement, following the imposition of new U.S. sanctions on Iran and escalating tensions in the Middle East. The surge in oil prices came despite the strengthening of the U.S. dollar, which typically exerts downward pressure on crude prices.

• Brent crude futures increased by $1.22, or 1.72%, settling at $72 per barrel.
• U.S. crude futures for April, which expired on the same day, gained $1.10, or 1.64%, to settle at $68.26 per barrel. May contracts, the most traded, rose by $1.16, or 1.73%, to $68.07 per barrel.

U.S. Sanctions on Iran:

The price increase follows the U.S. announcement of new sanctions targeting Iran, marking the first time sanctions have been applied to a Chinese independent refinery and ships that supply it with crude oil. China, the largest importer of Iranian oil, has private refineries that are major buyers of Iranian crude.

Iran’s Oil Production Impact:

Iran’s crude oil production exceeds 3 million barrels per day, meaning the new sanctions could have a significant impact on global oil supplies.

OPEC+ Production Cuts:

In related news, OPEC+ announced a new timeline for seven member countries, including Russia, Kazakhstan, and Iraq, to implement additional cuts in oil production to compensate for the overproduction of oil beyond the agreed-upon levels within the alliance. These cuts will range from 189,000 barrels per day to 435,000 barrels per day and will last until June 2026.

U.S. Crude Inventories Rise:

At the same time, U.S. crude inventories increased by 1.7 million barrels last week, surpassing expectations for a smaller increase of 512,000 barrels, according to a Reuters survey.

Impact of the U.S. Dollar on Oil Prices:

Despite the rise in oil prices, the U.S. dollar strengthened by 0.5%, making crude oil more expensive for foreign buyers. This comes after the Federal Reserve's announcement on Wednesday, signaling that it is in no hurry to cut interest rates, given the ongoing uncertainty surrounding tariffs imposed by the Trump administration.

Conclusion:

Oil prices remain highly sensitive to geopolitical and economic factors, with developments in Iran and OPEC+ policies, as well as fluctuations in the U.S. dollar, continuing to play a key role in shaping the global oil market.