Crude oil prices inched marginally higher on Friday, buoyed by US President Donald Trump’s continued pressure on Iran and OPEC+ (Organization of the Petroleum Exporting Countries and allies) renewed efforts to support energy prices ahead of its April meeting by committing to additional over-compensation plans. Marking their second consecutive weekly gain, liquid fuel markets appear desensitized to the US Federal Reserve’s implementation of a 30-day ban on energy strikes involving Russia and Ukraine.
Data compiled by Polymerupdate Research showed that benchmark Brent crude futures for near-month delivery on the Intercontinental Exchange (ICE) rose 0.22 percent, or US$ 0.16 a barrel, to US$ 72.16 a barrel on Friday, up from US$ 72 a barrel the previous day. This marks the highest crude oil price level since February 28.
Similarly, West Texas Intermediate (WTI) Cushing futures for near-month delivery on the New York Mercantile Exchange (Nymex) remained relatively stable amid volatility, edging slightly higher by just US$ 0.02 a barrel to settle at US$ 68.28 a barrel on Friday, compared to US$ 68.26 a barrel recorded on Thursday. This represents the highest price level since March 4. Although the gains were marginal, crude oil prices continued their upward march for the second consecutive week, following a similar rise observed the previous week.
US pressure on IranOn Thursday, the United States announced sanctions on China’s Shandong Shouguang Luqing Petrochemical Co. Ltd. for its alleged links to Iranian crude oil imports. This marks the first direct measure targeting China’s refinery value chain as U.S. President Donald Trump intensifies efforts to pressure Tehran into negotiating a new nuclear deal. Notably, Iran, a major crude oil producer, accounts for approximately 3.5% of global liquid fuel output.
Iran has faced multiple U.S. sanctions over the past several years. Additionally, President Trump implemented Washington’s fourth round of sanctions against Iran since taking office on January 20 this year. Trump has vowed to apply "maximum pressure" on Tehran, pledging to reduce the country’s crude oil exports to zero. The U.S. aims to force Iran to permanently cease its nuclear activities. Iran was estimated to have exported 1.8 million barrels per day (bpd) of crude oil in February; however, the latest U.S. sanctions are expected to slash these exports by 1 million bpd.
Referred to as a "teapot" refinery, Shandong Shouguang Luqing Petrochemical Co. Ltd. serves as a critical link in the supply chain for China, the world’s largest importer of Iranian crude oil. Until now, the refinery had avoided U.S. blacklists, which had primarily targeted middlemen and individual tankers. While this sanctioned Chinese refiner is not a major processor, it is part of a network of operators in China’s eastern Shandong province.
Washington has also imposed sanctions on a terminal operator, Luqing Petrochemical, based in southern Guangdong. This privately-run company plays a significant role in crude oil trade, especially as larger operators have scaled back their activities due to concerns about U.S. sanctions. In China, independently operated private oil refineries serve as an important economic lifeline for the Iranian regime. The U.S. remains committed to cutting off revenue streams that are believed to fund Tehran’s support for terrorism and the development of its nuclear program.
Luqing Petrochemical has reportedly purchased millions of barrels of Iranian oil, valued at approximately US$ 500 million. The company is also said to have received Iranian crude oil carried by previously sanctioned ships, allegedly linked to Houthi pirates who have been involved in attacking merchant vessels in the Red Sea.
OPEC+’s turnaroundThe Organization of the Petroleum Exporting Countries and its allies (OPEC+) released a new schedule following its ministers' virtual meeting on Thursday. The schedule requires seven member nations to implement additional oil output cuts to compensate for exceeding agreed production levels. The new plan outlines monthly oil output reductions ranging from 189,000 to 435,000 barrels per day (bpd) until June 2026.
Notably, eight members—Saudi Arabia, Russia, Iraq, the United Arab Emirates (UAE), Kuwait, Kazakhstan, Algeria, and Oman—reaffirmed on March 3 their intention to implement a monthly output increase of 138,000 bpd starting in April, citing healthier market fundamentals. “Taking into account the healthy market fundamentals and the positive market outlook, they reaffirmed their decision, agreed upon in December 2024, to proceed with a gradual and flexible return of the 2.2 million bpd voluntary adjustments starting in April 2025, while remaining adaptable to evolving conditions,” the group stated.
This gradual increase may be paused or reversed based on market conditions. The flexibility is intended to allow the group to continue supporting oil market stability. The members also confirmed their intention to fully compensate for any overproduced volumes since January 2024, in line with the compensation plans, ensuring that all compensations are completed by June 2026. However, overproduction by some member nations, coupled with strong output from non-OPEC+ countries, has dampened market sentiment, leading to a decline in crude oil prices.
Demand-supply indicatorsThe March edition of the Oil Market Report (OMR) assessed global oil demand growth to remain steady at 1.4 million barrels per day (bpd). Oil demand in the Organisation for Economic Cooperation and Development (OECD) is projected to grow by approximately 0.1 million bpd, with the Americas leading the growth, supported by OECD Europe and the Asia-Pacific region. In the non-OECD countries, oil demand is forecast to see robust year-on-year growth of 1.3 million bpd, driven by China, Other Asia, and India, with additional support from the Middle East and Latin America.
Total world oil demand is anticipated to average 105.2 million bpd in 2025, bolstered by strong air travel demand and healthy road mobility, including on-road diesel and trucking. Additionally, robust industrial, construction, and agricultural activities in non-OECD countries are expected to contribute to this growth. Capacity additions and favorable petrochemical margins in non-OECD countries—primarily in China and the Middle East—are also projected to drive oil demand growth. The forecast for global oil demand growth in 2026 remains robust at 1.4 million bpd year-on-year. The OECD is expected to grow by 0.1 million bpd year-on-year, while non-OECD demand is forecast to rise by approximately 1.3 million bpd.
The International Energy Agency (IEA) projects a global oil supply increase of about 1.6 million bpd, reaching 104.5 million bpd in 2025, with non-OPEC+ producers driving the majority of this growth. The Agency expects global oil demand growth to average 1.1 million bpd in 2025, up from 870,000 bpd in 2024. Similarly, the U.S. Energy Information Administration (EIA) forecasts global oil and liquid fuel production to average 104.4 million bpd in 2025, aligning with these trends.
OutlookCrude oil prices are likely to remain steady in the medium term due to rising supply from non-OPEC+ countries and the new output adjustment plan from OPEC+ member nations. Tight supply-demand fundamentals, coupled with uncertainty over global economic growth, geopolitical conflicts, and frequent changes in U.S. President Donald Trump's policies, may keep prices within a narrow range in the medium term, albeit with ongoing volatility.
DILIP KUMAR JHA
Editor
dilip.jha@polymerupdate.com
