HOUSTON: Oil prices gained 1% on Monday as US President Donald Trump said he will impose 25% tariff on countries that buy oil, gas from Venezuela, and on the back of new US sanctions on Iranian exports. Price gains were however capped by news that OPEC+’ will likely proceed with planned May oil output hike, and talks to end the war in Ukraine, which could increase supply of Russian crude to global markets.
Brent crude futures rose 70 cents, or 1%, to $72.86 a barrel by 11:11 a.m. ET (1511 GMT). US West Texas Intermediate crude was up 73 cents, or 1.05%, at $69. “We’ve got a little bit of a supply shock of Venezuela losing barrels to the world market. So that’s definitely a bullish force,” said Dennis Kissler, senior vice president of trading at BOK Financial, adding that investors were watching for tighter restrictions on Iran as well.
The US on Thursday issued new sanctions intended to hit Iranian oil exports, including what the State Department said were the first US measures targeting a Chinese “teapot refinery” processing the crude. Both benchmarks settled higher on Friday and recorded a second consecutive weekly gain. Wall Street also surged on Monday after signs the Trump administration is taking a measured approach on tariffs against its trading partners.
Trump signalled on Friday that there will be flexibility on tariffs and that his top trade chief plans to speak with his Chinese counterpart.
Meanwhile, US and Russian officials were in Saudi Arabia on Monday for talks over a broad ceasefire in Ukraine, with Washington also targeting a separate Black Sea maritime ceasefire deal while a wider agreement is thrashed out.
“The fear of more Russian barrels returning to the world market is probably one of the biggest negatives that we’ve seen,” Kissler added. OPEC+, a group that includes OPEC and allied producers led by Russia, will likely stick to its plan to raise oil output for a second consecutive month in May, three sources told Reuters, amid steady oil prices and plans to force some members to reduce pumping to compensate for past.
The group, which pumps over 40% of the world’s oil, is scheduled to raise output by 135,000 barrels per day in May. OPEC+ has been cutting output by 5.85 million barrels per day, equal to about 5.7% of global supply, in a series of steps since 2022 to support the market.
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