Oil prices surged on Thursday with Brent crude rising 3.2% to $67.96 a barrel and U.S. West Texas Intermediate (WTI) crude up 3.54% to $64.68 a barrel.
The gains were supported by growing optimism surrounding trade talks between the United States and the European Union and the imposition of new U.S. sanctions targeting Iran’s oil exports.
The market also saw its first weekly gain in three weeks with both Brent and WTI prices increasing by approximately 5% for the week.
The gains come amid concerns over global oil supply and demand as well as a volatile geopolitical landscape.
The rally was fueled by positive remarks from U.S. President Donald Trump and Italian Prime Minister Giorgia Meloni, who met in Washington and expressed confidence in resolving trade tensions that have strained U.S.-European relations.
Trump stated the potential for a trade deal with the EU, which could reduce the threat of oil demand destruction from U.S. tariffs.
“We’re going to have very little problem making a deal with Europe or anybody else, because we have something that everybody wants,” Trump said, suggesting that a trade agreement could help stabilize oil demand.
The U.S. administration’s sanctions on Iranian oil also played a significant role in the price increase. Sanctions announced on Wednesday targeted a China-based oil refinery and several other companies and vessels facilitating Iranian oil shipments.
The sanctions are part of Washington’s ongoing efforts to pressure Tehran over its nuclear program and could lead to a further reduction in Iranian oil exports.
“These are far-ranging sanctions, focusing on the Chinese ‘teapot’ refineries,” said John Kilduff, partner at Again Capital. “It’s a potential supply loss to the market that could further tighten the oil supply.”
The sanctions against Iran come as part of a broader strategy by the U.S. to curb Tehran’s oil exports, which have been a key source of revenue for the Iranian government.
In response, OPEC+ countries, including Iraq and Kazakhstan, have committed to making additional output cuts to stabilize the market.
While analysts at energy consulting firm Gelber and Associates noted that OPEC+ remains in control with flexibility to cut production if needed, oil prices have faced headwinds due to concerns over global trade tensions. Both OPEC and several major banks, including Goldman Sachs and JPMorgan, have revised their forecasts for oil prices and global demand growth due to uncertainty around U.S. tariffs and retaliatory actions from other countries.
Despite these challenges, oil prices gained ground on Thursday as markets absorbed the latest geopolitical developments.
The continued focus on trade negotiations and the tightening of supply due to sanctions on Iran provided a boost to investor sentiment, signaling potential stability in the oil market moving forward.
