Oil prices slipped on Friday as growing fears of a U.S.-led global recession weighed on market sentiment. However, both Brent crude and West Texas Intermediate (WTI) still managed to post their third consecutive weekly gains, driven by ongoing supply constraints linked to U.S. sanctions on Venezuela and Iran.
Brent crude futures fell 0.5% to $73.63 per barrel, while WTI dropped 0.8% to $69.36 per barrel. The declines were triggered by concerns over U.S. President Donald Trump’s planned reciprocal tariffs, set to take effect on April 2. Analysts at JPMorgan warned that heightened trade tensions could slow economic growth and impact oil demand in the coming months.
Despite recession worries, recent high-frequency oil demand data indicates steady consumption levels, suggesting that supply-side factors continue to support crude prices.
U.S. Sanctions Tighten Global Oil Supply
While economic uncertainty looms, tightening supply conditions remain a key driver of oil prices. The U.S. Energy Information Administration (EIA) reported a significant drop in crude inventories, with stockpiles declining by 3.3 million barrels to 433.6 million barrels, far exceeding analysts’ expectations of a 956,000-barrel draw.
- Brent crude gained 1.9% this week
- WTI crude increased 1.6% this week
- Since early March lows, Brent is up over 7% and WTI has climbed more than 6%
Adding further pressure to global supply, Washington has intensified its sanctions on Venezuelan and Iranian crude exports. Trump recently imposed new 25% tariffs on buyers of Venezuelan oil, just days after targeting China’s imports of Iranian crude.
OPEC+ to Adjust Production as U.S. Policies Shift
The U.S. sanctions could accelerate Venezuela’s projected output decline of 200,000 barrels per day this year, according to Barclays analyst Amarpreet Singh. With major refiners like India’s Reliance Industries halting imports from Venezuela, the global oil trade is rapidly adjusting to the shifting geopolitical landscape.
Meanwhile, OPEC+ is set to implement monthly production increases starting in April, as the group, led by Saudi Arabia and Russia, works to balance market demand. Analysts anticipate a tighter oil market in Q2, especially if Venezuelan and Iranian crude exports continue to shrink under U.S. sanctions.
According to StoneX analyst Alex Hodes, “If we see significant reductions in Venezuelan or Iranian barrels on the market, this would be a strongly bullish development for oil prices.”
With supply disruptions mounting and geopolitical tensions escalating, oil traders remain cautiously optimistic, watching for further policy shifts that could impact the market in the coming weeks.