Oil prices have been climbing, but not without turbulence. A confluence of geopolitical manoeuvres, supply interventions, and trade restrictions continues to shape the market’s trajectory—without necessarily giving it a clear direction.
The latest wildcard is the U.S. move to impose tariffs on countries importing Venezuelan crude, a direct hit on China, Venezuela’s biggest buyer. Theoretically, this could tighten global supply. But Beijing’s reaction remains measured—openly opposing Washington’s unilateral sanctions, yet stopping short of any direct retaliation. If history is any guide, Chinese refiners will find ways to work around the restrictions, rather than abandon cheap Venezuelan barrels.
Meanwhile, Iran’s oil flows are also under renewed scrutiny. The latest round of U.S. sanctions for the first time targeted an independent Chinese refiner, signaling that even smaller players are no longer immune. Analysts estimate this could slash Iranian crude exports by up to 1 million barrels per day—but as always, the question is not whether Iranian oil will find its way to market, but rather how it will be rerouted.
OPEC+ isn’t sitting idle either. The cartel is pressing for further output cuts from members that previously overshot their quotas—a move that could remove between 189,000 and 435,000 barrels per day from the market until mid-2026. But even as OPEC+ tries to enforce discipline, it is simultaneously sticking to its plan for an output hike in May. This underscores a market reality: producers are weighing short-term price support against long-term demand security, particularly with global growth concerns still in play.
The U.S. tightening its grip on Venezuelan and Iranian crude should, in theory, drive prices higher. But market sentiment isn’t entirely bullish. Chevron’s exit from Venezuela is expected to cut production by 200,000 barrels per day, yet the anticipation of seasonal demand pick-up is being tempered by uncertainty around U.S. trade policies and OPEC+’s balancing act.
For Pakistan, these developments could not have come at a worse time. The government took the opportunity in the last fortnight to raise the Petroleum Levy (PL) by an additional Rs10/liter, pushing it to Rs70/liter, without immediately increasing consumer prices. But crude oil prices have since moved unfavorably, putting policymakers in a tight spot ahead of the next petroleum price revision on April 1. If the PL remains at its elevated level, price hikes will be inevitable—an unwelcome development, especially with Eid just around the corner. The government’s room to manoeuvre is shrinking, and any attempt to absorb the increase through subsidies will only add to fiscal pressures.
For now, oil prices remain in a tug-of-war between geopolitical supply risks and OPEC+‘s careful calibration. If demand picks up as expected, prices could firm up. But with Washington’s tariff threats shifting by the week and OPEC+ still navigating internal politics, the floor under oil prices may be firmer than the ceiling.
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