Oil prices are holding steady at a month-high level amid expectations of a global supply reduction triggered by U.S. tariffs on Venezuelan oil imports and restrictions on Iranian oil trade.

According to Reuters, Brent crude futures fell by 14 cents (0.2%) to $73.89 per barrel, while U.S. WTI futures decreased by 12 cents (0.2%) to $69.80.

These shifts are minor compared to a rise of more than 2% earlier this week. Overall, since early March, prices have surged over 7% after hitting a multi-month low.

Analysts attribute this growth primarily to changes in global oil sanction policies.

On Monday, President Donald Trump announced a 25% tariff on potential buyers of Venezuelan oil, following U.S. sanctions on Iranian oil imports to China.

This decision has created uncertainty among buyers, leading to a halt in Venezuelan oil supplies to China, its largest consumer. Additionally, sources report that Indian company Reliance Industries plans to stop importing Venezuelan oil.

"The potential disappearance of Venezuelan supplies due to secondary sanctions, along with threats of similar restrictions on Iranian oil, has created a palpable market deficit," explained Sparta Commodities analyst June Go.

The market has also been influenced by rising demand in the U.S., the world's largest oil consumer, where crude oil inventories dropped by more than expected, down by 3.3 million barrels to 433.6 million barrels, according to the EIA.

However, the global oil market remains uncertain. The active imposition of tariffs by the U.S. on its trading partners raises concerns about an economic downturn that could impact oil demand.

As a result, analysts do not anticipate a prolonged increase in oil prices under current conditions.

"While the market is experiencing increased uncertainty, we maintain our forecast for the average Brent price at $76 per barrel in 2025, down from $80 per barrel in 2024," note BMI analysts.

Reminder:

President Trump stated that a 25% tariff would be imposed on any country purchasing oil and gas from Venezuela, citing migration and criminal gang issues in the U.S.