By Giulia Petroni

Here's a look at what happened in oil markets in the week of April 14-17 and what the focus will be in the days to come.

OVERVIEW: Oil prices rose to a two-week high ahead of the Easter holidays after the U.S. issued fresh sanctions targeting Iranian oil exports and some OPEC+ members outlined plans to compensate for producing above targets. Brent crude trades over $66 a barrel, while West Texas Intermediate is above $62 a barrel. Both contracts are set for weekly gains despite lingering concerns over the impact of U.S. tariffs on the world economy.

MACRO: A certain level of calm settled over markets following last week's rout, with investors in wait-and-see mode amid fears of escalating trade tensions and a global recession. "With the Easter long weekend just around the corner for many Western markets, the big question is whether this bounce can stick or if it's just another false dawn in what's been an increasingly erratic landscape," says Fawad Razaqzada, market analyst at Forex.com.

The European Central Bank cut interest rates to offset the economic blow of U.S. tariffs, increasing the gap between rates in Europe and the U.S. to the widest in two years. Meanwhile, President Trump criticized Federal Reserve Chair Jerome Powell for not cutting rates faster, just a day after Powell warned that tariffs are likely to raise prices and weaken the economy. The latest U.S. data showed jobless claims fell to two-month low, while retail sales rose 1.4% last month from February.

GEOPOLITICAL RISKS: The U.S. imposed fresh sanctions on another China-based teapot refinery to target Iranian oil exports earlier this week, providing a boost to prices. Several companies and vessels responsible for facilitating shipments to China were also targeted. Meanwhile, the next round of talks between Washington and Tehran surrounding a nuclear agreement is set to be held on Saturday.

However, uncertainties over the impact of U.S. tariffs on global trade persist. Trump said on a social media post he had a "very productive" call with Mexico and that China wants to meet. Earlier this week, Bloomberg reported Beijing would be open to negotiations with the U.S. under certain conditions.

SUPPLY AND DEMAND: Both the International Energy Agency and the Organization of the Petroleum Exporting Countries cut their estimates for global oil demand growth, citing the impact of U.S. tariffs on the global economy and crude consumption. The cartel now expects demand growth at 1.3 million barrels a day this year and 1.28 million barrels a day next year, while the Paris-based agency forecasts demand to grow by 726,000 barrels a day and 692,000 barrels a day in the periods.

OPEC also received updated compensation plans from members of the OPEC+ alliance who produced above their production quotas by a cumulative 4.573 million barrels a day.

Meanwhile, the latest data from the U.S. Energy Information Administration showed U.S. crude oil inventories rose for a third consecutive week and gasoline and distillate stockpiles fell as refineries lowered their capacity use. China's crude imports rebounded in March, with analysts saying the rise can be attributed to record-high shipments from Iran.

WHAT'S AHEAD: Any developments in trade talks between the U.S. and major international partners will be under the spotlight in the coming weeks. Later on Thursday, Trump is scheduled to speak with Italian Prime Minister Giorgia Meloni in a meeting that is expected to focus on trade. Meloni is the first European leader traveling to Washington since the U.S. announced and then paused 20% tariffs on the European Union.

At a macro level, economists will keep a close eye on the S&P Global Flash U.S. Composite PMI--a gauge of activity in the manufacturing and services sectors--and consumer sentiment data due next week.

Write to Giulia Petroni at giulia.petroni@wsj.com

(END) Dow Jones Newswires

April 17, 2025 10:51 ET (14:51 GMT)

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