Crude Oil Prices Surge as US Threatens Tougher Sanctions on Iran

Published 14/05/2025, 07:05

Oil prices moved higher amid threats of tougher sanctions on Iran in the absence of a nuclear deal

Energy – Iranian Sanctions

ICE Brent rallied by almost 2.6% yesterday, reaching its highest since late April. A weaker US Dollar following a cooler-than-expected US consumer price index (CPI) provided some tailwinds to the oil market. However, the key catalyst is the threat of further sanctions on Iranian oil exports.

Yesterday, the US Treasury sanctioned a network that facilitates shipments of Iranian crude oil to China. Also, President Trump said tougher sanctions are possible if an Iran nuclear deal isn’t struck. Trump has repeatedly threatened to drive Iranian oil exports to zero.

While this is unlikely, there’s certainly room for a sizable reduction, with Iran currently exporting in the neighbourhood of 1.6m b/d. In 2019, Iranian oil exports averaged around 600k b/d after Trump reimposed sanctions in late 2018.

Lower Iranian oil flows should be welcomed by other OPEC+ members, as it provides room to increase output. For now, all signs suggest that OPEC+ will likely continue with aggressive supply hikes. We’ll have to wait until 1 June to see what the group decides for its output policy for July.

Already announced supply hikes by OPEC+ should be welcomed by Trump, given his desire to see lower oil prices. However, he may want to be careful on how low prices go, given the impact it will have on the US oil industry, causing a pullback in drilling activity.

Overnight, numbers from the American Petroleum Institute show that US crude oil inventories increased by 4.29m barrels over the last week, very different from the roughly 2 million barrel draw the market expected. Meanwhile, crude stocks in Cushing fell by 850k barrels, while gasoline and distillate stocks fell by 1.37m barrels and 3.68m barrels, respectively.

The more widely followed Energy Information Administration (EIA) inventory report will be released later today. Other releases include OPEC’s monthly market report, which will include their latest market outlook

Agriculture – UNICA Reports Lower Sugarcane Crush

The latest fortnightly report from the Brazilian Sugarcane and Bioenergy Industry Association (UNICA) shows that sugar cane crushing in Central-South Brazil stood at 17.7 mt over the second half of April, down 49.4% from a year ago. This leaves the cumulative sugar cane crush for the season at 34.3 mt, down 33% year on year. The sugar mix so far this season stands at 45.27%, slightly lower than the 46.98% over the same period last season.

This is despite sugar continuing to trade at a premium to hydrous ethanol. Cumulative sugar production so far this season stands at 1.58 mt, down 38.6% YoY. The lower crush numbers provided a boost to sugar prices yesterday, with No.11 raw sugar settling 2.94% higher on the day.

Disclaimer: This publication has been prepared by ING solely for information purposes irrespective of a particular user’s means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more

Original Post

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers
© 2007-2025 - Fusion Media Limited. All Rights Reserved.