Improving US-EU trade prospects and renewed sanctions on Iranian oil drive bullish momentum in global crude markets. Should investors buy into the rally?
20 Apr 2025: Crude oil prices staged a strong rebound this week, logging their first weekly gain in three weeks, buoyed by fresh US sanctions on Iran and optimism over renewed US-European Union trade talks.
Brent crude futures closed up $2.11, or 3.2%, at $67.96 per barrel, while WTI (West Texas Intermediate) climbed $2.21, or 3.54%, to $64.68 per barrel. Both benchmarks posted a 5% weekly gain, signaling growing market confidence in supply disruption and easing geopolitical friction.
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What Triggered the Price Jump?
- US-EU Trade Optimism:
A high-profile meeting between US President Donald Trump and Italian PM Giorgia Meloni in Washington rekindled hopes of resolving longstanding trade tensions. “We’re going to have very little problem making a deal,” Trump remarked, hinting at a potential breakthrough. - Iran Oil Sanctions Tighten:
Washington imposed new sanctions on firms and vessels linked to Iranian oil exports, including a China-based “teapot” refinery, part of Tehran’s shadow oil network. These sanctions aim to further curb Iran’s oil output, intensifying supply-side worries. - OPEC Compliance Push:
OPEC confirmed fresh commitments from Iraq, Kazakhstan, and other members to compensate for previous overproduction, signaling efforts to keep global supply in check.
Analyst Views: What’s Next for Oil?
Despite the rally, outlook remains mixed. The International Energy Agency (IEA), OPEC, Goldman Sachs, and JPMorgan all revised down their demand forecasts this week, citing turbulence from global tariff tensions and sluggish trade growth.
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Kaynat Chainwala, AVP of Commodity Research at Kotak Securities, noted:
“WTI crude oil surged above $63 per barrel supported by mounting supply disruption concerns, improving prospects for US-China trade talks, and falling product inventories.”
Meanwhile, Religare Broking issued a ‘sell’ call on MCX crude futures, citing overbought conditions and weak demand fundamentals.
Inventory Snapshot (US EIA Report):
- Crude inventories ↑ 0.5 million barrels
- Gasoline stocks ↓ 2 million barrels
- Distillate stocks ↓ 1.9 million barrels
Despite rising crude inventories, falling refined product stocks gave bulls a reason to cheer.
Investment Outlook: Should You Buy?
Crude oil’s rise above key resistance levels suggests short-term bullish momentum, but analysts urge caution due to:
- Global trade uncertainty
- Mixed demand outlook
- Overbought technical indicators
Buy-on-dips may suit aggressive traders, while long-term investors should await further clarity on US-China and US-EU trade negotiations before entering.
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crude oil prices, Brent crude, WTI, Iran sanctions, US-EU trade deal, OPEC output cuts, oil market outlook, WTI forecast, MCX crude, US-China tariffs, energy market, global oil trade