Oil prices surge more than 3% amid US-EU trade deal hopes and new Iran sanctions

Crude posts first weekly gain after falling in past two weeks

Saudi Aramco's Ras Tanura oil refinery and oil terminal. Opec has cut its oil demand forecast for 2025 amid market uncertainty stemming from US tariffs. Reuters

Oil prices settled more than 3 per cent higher on Thursday, posting the first weekly gain in three weeks on hopes of a potential trade deal between the US and the EU and new sanctions on Iran's oil exports.

Brent, the benchmark for two thirds of the world's oil, jumped 3.2 per cent to $67.96 a barrel. West Texas Intermediate, the gauge that tracks US crude, leapt 3.54 per cent to $64.68 per barrel.

Thursday was the last settlement day this week because markets were closed on Friday ahead of the Easter weekend.

"US pressure on Iran and some covering of shorts prior to the long weekend saw a robust rise in global oil prices yesterday," Daniel Richards, senior economist at Emirates NBD, wrote in a note on Friday.

Crude prices have now recovered by more than 15 per cent since they slid below the $60 level after the sweeping tariffs announced by US President Donald Trump. However, from its recent peak on April 2, Brent is down by 9.3 per cent, while WTI has shed 9.8 per cent. This year, Brent is down by about 9 per cent, while WTI has lost nearly 10 per cent.

"Fresh US sanctions on Iranian oil exports raise supply concerns, boosting prices. Mr Trump’s optimism on US-EU trade talks supports global demand expectations," said analysts at Moneta Markets, a Johannesburg-based broker.

Countries around the world have pushed back against the tariffs imposed by Mr Trump, although many are also holding negotiations.

The EU, one of America's key trading partners, has been one of the most critical. But talks have progressed and Mr Trump on Thursday said he was "100 per cent" confident that a deal would be struck, but with no timeline in sight.

Oil prices were also lifted by new sanctions imposed on Wednesday by the US on Iran to curb its exports, including against a "teapot" refinery – or small independent oil refiner – based in China.

Washington and Tehran have held negotiations, with the next round of talks to take place this weekend. The countries are expected to set out a framework for negotiations on Iran's nuclear programme, a senior US official said on Wednesday.

Discussions have taken place against the backdrop of Mr Trump's renewed policy of “maximum pressure” on Iran, while Tehran is seeking much-needed sanctions relief.

This week, the Opec slashed its oil demand forecast for 2025 amid the market uncertainty stemming from the tariffs. Oil demand growth was revised down to 1.3 million barrels per day, with the "minor adjustment" mainly based on the expected impact of tariffs on the market, the group said. Demand is expected to grow by 40,000 bpd. For 2026, Opec revised its global demand growth forecast slightly to about 1.3 million bpd.

The International Energy Agency this week also lowered its forecast for oil demand growth in 2025, revising it down by 300,000 bpd to 730,000 bpd, similarly citing the escalating trade tensions that have negatively affected the economic outlook. The downgrade comes after robust oil consumption in the first quarter of 2025, which rose by 1.2 million bpd – its strongest rate since 2023, it said.