Oil prices rose on Friday and were on track to post their largest weekly gains since early January, as new US sanctions on Iran and a fresh OPEC+ output cut plan fuelled expectations of tighter global supply.
At the current time, West Texas Intermediate (WTI) crude is up 0.34% at US$68.30 per barrel, while Brent crude is up 0.25% at US$72.18. Both benchmarks are on track for weekly gains of around 2%.
The gains come after the US Treasury and State Department on Thursday announced sweeping new sanctions targeting Iran’s oil trade—most notably sanctioning, for the first time, a Chinese teapot refinery and a crude oil terminal operator in China for buying and storing Iranian oil.
The designated refiner, Shandong Shouguang Luqing Petrochemical, allegedly received over US$500m worth of Iranian crude shipped via sanctioned “shadow fleet” tankers. The US government said the oil was linked to the Iranian military and to Yemen’s Iran-backed Houthi group.
“This is the US signalling that this maximum pressure campaign is different from what’s come before,” said Greg Brew, senior Iran analyst at Eurasia Group. “It’s a warning shot—not just to Luqing but to the whole supply chain: ports, tankers, intermediaries.”
Alongside Luqing, the US also sanctioned the Huaying Daya Bay terminal in Huizhou for accepting 1 million barrels of Iranian crude in January. Eighteen other tankers and companies—registered across Panama, the Seychelles, Hong Kong, Liberia, and the British Virgin Islands—were also designated.
“Teapot refinery purchases of Iranian oil provide the primary economic lifeline for the Iranian regime, the world’s leading state sponsor of terror,” said Treasury Secretary Scott Bessent.
The latest measures mark the fourth round of sanctions since President Donald Trump revived his “maximum pressure” campaign on Tehran in February, with the stated aim of cutting Iran’s crude exports to zero. The US estimates Iran currently produces 3.4 million barrels per day, with China the dominant buyer.
While analysts say the immediate physical disruption to oil flows may be limited, the policy shift is expected to reintroduce a risk premium to markets. “The sanctions on Chinese entities were a clear escalation,” said RBC Capital Markets in a note. “The physical implications are minimal, but the signal matters.”
Sanctions were not the only bullish factor. OPEC+ announced Thursday that seven of its members will make additional cuts totalling between 189,000 and 435,000 barrels per day to compensate for overproduction. The cuts will remain in place until June 2026.
Earlier this month, OPEC+ also confirmed a modest output increase of 138,000 bpd beginning in April, easing a portion of the group’s collective 5.85 million bpd in cuts introduced since 2022.
Still, analysts remain cautious. “While the group shares a plan for compensation cuts, it certainly doesn’t mean members will follow it,” ING said Friday. “A handful of members have consistently produced above their targets.”
The market also remains alert to geopolitical risks in the Red Sea. After a brief lull following a ceasefire between Israel and Hamas in January, Houthi militants have resumed attacks on international shipping, prompting renewed US airstrikes. Trump has linked the group’s actions directly to Iran, warning that Tehran would be held responsible for future incidents.
