Oil Prices Rise Amid Iran Sanctions but Face Weekly Decline Over Trade War Fears

Oil prices edged higher on Friday following the United States’ new sanctions on Iran’s crude exports. However, both Brent crude and West Texas Intermediate (WTI) remained on track for a third consecutive weekly decline, weighed down by escalating trade tensions between the U.S. and China.

By 3 p.m. Saudi time, Brent crude futures had climbed 51 cents (0.7%) to $74.80 per barrel, but were still set for a 2.6% weekly drop. Meanwhile, WTI crude gained 48 cents (0.7%), trading at $71.09 per barrel, marking a 2.1% decline for the week.

U.S. Tightens Sanctions on Iranian Oil

The U.S. Treasury Department announced new sanctions on Thursday, targeting individuals and tankers involved in exporting millions of barrels of Iranian crude oil to China each year. The move is part of Washington’s ongoing strategy to tighten pressure on Tehran.

Michael Haigh, global head of commodities research at Société Générale, said the market views Trump’s “maximum pressure” strategy on Iran seriously, with the French bank forecasting that Iranian oil exports could be cut in half.

However, despite the geopolitical uncertainty, oil markets have remained under pressure due to broader concerns about global demand.

Trade War Fears Weigh on Oil Markets

U.S. President Donald Trump’s renewed trade war with China has rattled global markets, creating downside pressure on oil prices. Trump recently announced a 10% tariff on Chinese imports but later suspended similar measures against Mexico and Canada.

Analysts at BMI Research noted that concerns over a full-scale trade war are fueling fears of weaker oil demand. Tariffs and retaliatory measures by various countries could slow global economic growth, which in turn, reduces demand for crude oil.

“The imposition of tariffs should be bullish for oil markets because it adds uncertainty,” Haigh explained. “But instead, demand concerns have dominated, as tariffs and tit-for-tat trade measures hurt global GDP and oil consumption.”

U.S. Oil Production and Inventories Add to Price Pressures

Oil prices had already faced downward pressure after Trump reaffirmed his commitment to increasing U.S. oil production. His remarks unsettled traders, especially after data showed a larger-than-expected increase in U.S. crude stockpiles.

The U.S. Energy Information Administration (EIA) reported a sharp rise in crude inventories last week, reflecting weakened demand due to ongoing refinery maintenance. These swelling stockpiles have kept global oil benchmarks in check, even as geopolitical tensions continue to unfold.

With oil markets caught between geopolitical risks and economic uncertainty, traders remain focused on future demand trends amid a shifting global trade landscape.