Oil prices gained on Monday as fresh U.S. sanctions on Iranian crude exports lifted market sentiment despite ongoing uncertainty surrounding the broader geopolitical landscape.
Brent crude oil, against which Nigerian oil is priced, rose by 36 cents or 0.5 percent to trade at $72.52 a barrel as of 11:04 a.m Nigerian time while U.S. West Texas Intermediate (WTI) crude increased by 40 cents, or 0.6 percent to $68.68 a barrel.
The increase in oil prices was after the United States move to tighten restrictions on Iranian oil flows, including newly announced sanctions targeting what the U.S. State Department described as a Chinese “teapot refinery” processing Iranian crude.
The sanctions represent the first time the U.S. has directly penalized a Chinese facility under its Iran oil sanctions framework.
“Crude remains rangebound as traders continued to weigh the impact of new U.S. tariffs, the risk of an economic slowdown, as well as increased OPEC+ supply from next month and the prospect of stepped-up U.S. sanctions lowering supply from Iran,” said Ole Hansen, Head of Commodity Strategy at Saxo Bank.
The measures have raised expectations of tighter near-term supply. Analysts estimate that up to one million barrels per day of Iranian output could be affected, though market participants believe the impact could be offset by additional production from key OPEC+ members.
Last week, OPEC+ unveiled a revised production schedule requiring seven member countries to implement deeper cuts to offset previous overproduction.
The group has already been curbing output by 5.85 million barrels per day, representing roughly 5.7 percent of global supply, since 2022.
Despite the potential drop in Iranian barrels, broader sentiment remains cautious as U.S. and Russian officials convened in Saudi Arabia on Monday to explore a potential ceasefire agreement in Ukraine.
Market analysts say progress in the talks could lead to increased global availability of Russian crude, easing some of the supply pressures caused by Western sanctions.
The United States is also pushing for a separate maritime ceasefire deal in the Black Sea, which could improve logistics and energy trade routes.
Meanwhile, comments from former U.S. President Donald Trump appeared to moderate investor concerns over trade tensions.
Trump signaled flexibility on previously announced tariffs and revealed that his trade representative plans to engage directly with Chinese officials in the coming days.
Both Brent and WTI ended higher last week, posting a second consecutive weekly gain. The combination of escalating sanctions, evolving OPEC+ dynamics and shifting geopolitical developments continues to shape oil market expectations for the weeks ahead.
