After a sharp decline, oil prices have rebounded, driven by renewed geopolitical tensions and shifting market dynamics. The recent uptick follows U.S. President Donald Trump’s announcement of potential secondary sanctions on Iranian oil purchases, a move that could significantly impact global oil supply. Brent crude futures settled at $62.13 per barrel, while U.S. West Texas Intermediate closed at $59.24, both marking a 1.8% increase.
The threat of sanctions comes amid the postponement of U.S.-Iran nuclear talks, adding uncertainty to an already volatile market. Analysts suggest that strict enforcement of these sanctions could remove approximately 1.5 million barrels per day from the global market, tightening supply.
Concurrently, Saudi Arabia has indicated a willingness to endure prolonged periods of lower oil prices without implementing further supply cuts. This stance reflects Riyadh’s strategic shift, possibly aiming to maintain market share and discipline among OPEC+ members.
Adding to the complexity, several OPEC+ countries are proposing accelerated output hikes in June, a move that could further influence market equilibrium. The group’s upcoming meeting on May 5 will be pivotal in determining the direction of oil production policies.
On the demand side, the U.S. economy contracted for the first time in three years, raising concerns about future oil consumption. However, China’s openness to trade discussions with the U.S. has injected a note of optimism, potentially mitigating some demand-side fears.
Union Jack Oil plc (LON:UJO) is an oil and gas company with a focus on onshore production, development, exploration and investment opportunities within the United Kingdom and the United States of America hydrocarbon sector.
