Tighter Sanctions on Iran and Russia Could Push Prices Higher

Crude oil prices held above $70 a barrel, despite persistent economic risks and an expected production increase from the OPEC+ alliance in April, adding further pressure to an oversupplied market.

The near-term outlook for the market has been bolstered by several factors, including the Federal Reserve's unchanged interest rate decision and positive data on US oil consumption. However, US President Donald Trump's pro-low fuel price stance remains a crucial factor in determining price direction, according to Salih Yilmaz and Will Hirs, senior energy analysts at Bloomberg Intelligence.

Yilmaz and Hirs believe Trump's announcement of his intention to demand OPEC lower oil prices was not surprising, as he has previously directly intervened in the alliance's policies, such as in 2018 when he pressured Saudi Arabia to increase production by 2 million barrels per day. In 2020, he brokered a historic agreement to cut production to stabilize the market during the COVID-19 crisis.

We expect President Trump's preference for low-cost fuels to influence his future policies and implementation of sanctions, potentially making him a key factor in maintaining relatively low oil prices despite supply challenges. "Conversely, OPEC+'s spare capacity could mitigate any supply disruptions resulting from sanctions, and the US president is likely to continue engaging directly with the group," they said.