Oil News: U.S. Sanctions Squeeze Crude Supply, Bullish Outlook Builds

Will U.S. Sanctions Keep the Crude Oil Market Tight?

Crude oil posted its third straight weekly gain, buoyed by intensifying U.S. sanctions on key exporters and persistent signs of tightening global supply. Despite a Friday pullback on recession concerns,

WTI ended the week up 1.6%, closing at $69.36. The primary catalyst remained Washington’s aggressive push to curb exports from Venezuela and Iran, deepening physical market constraints even as demand-side risks loom large.

How Are Sanctions on Venezuela and Iran Disrupting Global Flows?

The Trump administration’s decision to slap 25% tariffs on countries importing Venezuelan crude is starting to ripple through global trade. China, Venezuela’s top buyer, has reportedly halted purchases, while India’s Reliance Industries—the world’s largest refiner—is also scaling back.

Coupled with earlier U.S. sanctions on Iranian crude exports, these actions have effectively removed a significant volume of barrels from the market. Analysts at Barclays estimate that Venezuela’s output could drop by 200,000 bpd, a hit that tightens balances just as Iranian flows to China are being choked by freight restrictions and compliance fears.

Can OPEC+ Balance Rising Supply Risks with Output Hikes?

OPEC+ remains committed to its strategy of gradual monthly production hikes, confirming a 138,000 bpd increase starting in April, with expectations for a similar step in May. However, several members are being asked to cut production further to compensate for previous overproduction.

While this creates an impression of rising supply, the group is still withholding nearly 5.85 million bpd—around 5.7% of global supply. This restraint, paired with unexpected losses from sanctioned nations, continues to support a bullish price environment.

Is Strong U.S. Demand Offsetting Global Growth Worries?

Bullish sentiment was reinforced by a larger-than-expected 3.3 million-barrel draw in U.S. crude inventories, a sign of firm domestic demand. The draw far exceeded analyst forecasts and added weight to bullish bets. However, macro headwinds persist.

The White House’s broader tariff agenda, including proposed levies on automobiles, has triggered recession fears. While current high-frequency oil demand data remains stable, analysts remain cautious about broader global demand trends, especially with key indicators like China’s PMI on the horizon.

Oil Prices Forecast: Cautiously Bullish on Supply Constraints

Crude oil markets remain fundamentally supported by tightening supply driven by aggressive U.S. sanctions and ongoing OPEC+ restraint. However, upside potential is increasingly tempered by macroeconomic uncertainty and trade-driven demand risks.

The balance of risks currently favors a cautiously bullish outlook, with traders closely monitoring geopolitics, OPEC+ decisions, and macro signals to gauge further direction.

The outsized EIA draw further supports the bullish bias, confirming strong U.S. demand alongside global supply constraints. Inventory trends will remain a key metric for gauging follow-through in the weeks ahead.

Technically, the market is facing headwinds at a pivot zone bounded by $69.31 and $70.57. The most important barrier, however, is the 52-week moving average at $70.72. Overcoming this level could launch an acceleration to the upside with $72.11 the next target.

More Information in our Economic Calendar.