The crude oil market rebounded significantly last Friday, with both Brent Crude and U.S. Oil rising by more than 2%. This was due to strong signals from the U.S. that they might block Iranian oil exports, heightening market expectations of reduced supply.
Brent crude futures rose by 2.26%, closing at $64.76 per barrel; U.S. WTI crude rose by 2.38%, closing at $61.50 per barrel. Both recorded a rare substantial increase for the week. The catalyst for this price rise was a statement from U.S. Energy Secretary Chris Wright: As part of the Trump administration's pressure on Iran's nuclear program, the U.S. will consider blocking Iran's oil exports, which was widely interpreted by the market as signaling a potential hardening of U.S. policy.
Andrew Lipow, president of Lipow Oil Associates, pointed out: “If the U.S. strictly restricts Iranian oil exports, it will inevitably reduce global oil supply, and the market will surely react.”
In fact, this week the oil market has experienced frequent fluctuations. Besides the Iran factor, frequent adjustments in President Trump's trade policies have also become an important variable in oil price trends. Although the U.S. decision to temporarily halt new tariffs on many countries has eased some pressure, the ongoing trade dispute between China and the U.S. keeps the market wary of global economic growth and oil demand.
The U.S. Energy Information Administration (EIA) released a pessimistic outlook last week, lowering the global economic growth forecast for 2024 to 2025 and reducing the forecast for global oil demand for this year and next. The agency warned that if trade frictions persist, they could put downward pressure on oil prices.
Meanwhile, the U.S. Department of Energy added over the weekend that the U.S. government expects the average oil price over the next four years to be lower than current levels, based on changes in the global economic outlook and U.S. energy policy orientation. Additionally, U.S.-Saudi cooperation in the field of civilian nuclear energy will be on the agenda, with more details expected to be announced later this year, which could potentially impact the medium to long-term crude oil market.
In summary, although geopolitical tensions support short-term oil price rises, the uncertainty of global trade conditions and the underlying concerns of slowing demand growth still make the oil market outlook uncertain. Investors need to closely monitor the interconnected effects of U.S.-Iran relations, global trade policy, and macroeconomic data when assessing the next direction of crude oil prices.
