Oil Prices Climb on Iran Sanctions, OPEC Output Cuts, and U.S. Inventory Data

Oil prices rose on Thursday amid growing concerns of supply tightening after the U.S. imposed new sanctions to restrict Iranian oil exports and several OPEC members pledged to cut output to address overproduction.

Brent crude futures gained 0.5% to $66.19 per barrel, while U.S. West Texas Intermediate (WTI) crude rose 0.7% to $62.91. Both benchmarks closed 2% higher on Wednesday, reaching their highest levels since April 3, and are on pace for their first weekly gain in three weeks. Markets close early this week ahead of Good Friday and Easter holidays.

The Biden administration’s latest sanctions targeted Iranian oil shipments, including a Chinese “teapot” refinery, signaling intensified pressure on Tehran amid rising nuclear tensions. Meanwhile, OPEC announced on Wednesday that Iraq, Kazakhstan, and other members submitted revised plans to reduce output after previously exceeding quotas.

Although some analysts downplayed the impact of Iranian production and OPEC compliance, these developments contributed to a more bullish sentiment. Michael McCarthy, CEO of Moomoo, noted that despite skepticism, both issues influenced market optimism. He also pointed to strong U.S. gasoline and distillate drawdowns and a smaller-than-expected build in crude stockpiles as supportive factors.

Concerns about a possible glut of U.S. oil have eased, with declining refining activity suggesting potential bottlenecks in supply, McCarthy added.

However, downside risks remain. OPEC, the International Energy Agency (IEA), Goldman Sachs, and JP Morgan all cut their forecasts for oil prices and demand growth this week. Escalating trade tensions from new U.S. tariffs and retaliatory actions have disrupted global markets, leading the World Trade Organization to slash its 2025 global trade growth forecast from 3.0% to -0.2%.