Oil prices registered their second consecutive weekly gain despite a slight decline on Friday, driven by renewed US sanctions against Iran and the latest OPEC+ production strategy, both of which heightened expectations of a tighter supply.

Brent crude futures settled at $72.12 per barrel, down 16 cents, while WTI crude edged lower by 1 cent to $68.29. Over the week, Brent crude rose by 2.08% and WTI by 1.64%, marking their most significant weekly increases since the beginning of the year.

The US Treasury’s latest sanctions against Iran, announced on Thursday, extended to independent Chinese refineries and other entities involved in supplying Iranian crude to China. The increasingly restrictive sanctions are expected to make market participants more cautious in shipping Iranian crude.

Adding to supply constraints, OPEC+ announced additional output reductions by seven member nations to compensate for previous overproduction. These cuts, ranging from 189,000 to 435,000 barrels per day (bpd) monthly, will continue until June 2026. Meanwhile, OPEC+ confirmed that eight of its members will implement a monthly output increase of 138,000 bpd from April, partially reversing the 5.85 million bpd of cuts imposed since 2022 to stabilise the market. However, Kazakhstan’s oil output hit a record high in March, exceeding its OPEC+ production quotas due to oilfield expansion.

Oil prices rebounded by over 1% on Monday after President Trump announced a 25% tariff on nations purchasing Venezuelan oil and gas. However, the impact was somewhat limited by a subsequent US government decision granting Chevron an extension until May 27 to conclude its Venezuelan operations. While this eased immediate pressure on Chevron, it intensified challenges for other consumers of Venezuelan crude, creating uncertainty over the enforcement of the new tariff. Brent crude rose by 91 cents to $73.03 per barrel, while WTI climbed 96 cents to $69.25. OPEC+ is expected to proceed with its planned May production increase.

On Tuesday, oil prices continued their upward trend due to concerns over tighter global supply following the US tariff threat on Venezuelan crude. Brent crude futures settled at $73.17 per barrel, up 14 cents, while WTI crude rose by 5 cents to $69.30. Meanwhile, the US brokered agreements with both Ukraine and Russia to temporarily halt attacks on maritime and energy infrastructure. In return, Washington pledged to push for the relaxation of certain sanctions on Moscow. However, both Kyiv and Moscow expressed doubts about each other’s commitment to compliance.

The Trump administration’s proposed tariffs on Venezuelan crude heightened supply concerns, pushing benchmark crude prices over 1% higher on Monday. Venezuela, whose primary export is oil, counts China—already subject to US import tariffs—as its largest customer. However, enforcement challenges remain, as alternative buyers could step in at increased costs.

Additionally, the extension of Chevron’s operational deadline in Venezuela to May 27 could lead to a reduction of approximately 200,000 bpd in Venezuelan oil production. According to US Commerce Department data, Venezuela was among the top foreign oil suppliers to the US last year.

Adding to the potential supply-side pressures, the US imposed fresh sanctions last week targeting Iranian oil exports. Despite these constraints, executives from commodity trading firms told Reuters they expect a well-supplied oil market for the remainder of the year, although concerns persist over the pace of global demand growth.

Implications for Nigeria

As a major oil producer, Nigeria remains highly exposed to global price swings. The recent price rally has several implications:

• Revenue Impact: Rising Brent prices provide a short-term boost to Nigeria’s oil earnings, which is crucial given the country’s fiscal challenges. However, volatility makes revenue planning difficult.

• Foreign Exchange Reserves: Higher oil prices may strengthen Nigeria’s foreign reserves, easing currency pressures. However, any drop in prices could further strain the naira.

• Subsidy and Refining Policies: If oil prices remain elevated, Nigeria’s fuel subsidy costs may increase, straining government finances. This reinforces the need to accelerate domestic refining capacity through its indigenous Refinery and other projects.

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The oil market remains in flux, with geopolitical tensions, supply constraints and OPEC+ policies influencing price movements. While Brent and WTI prices have risen this week, potential developments such as a Russia–Ukraine ceasefire or increased OPEC+ production could alter the trajectory.