“Oil Volatility Driven by the Impact of Sanctions on Iran, Dollar Declines”

Oil Prices Rise Due to Sanctions on Iran and Russia

Oil prices changed course, rising in the latest trading due to sanctions imposed on Iran and Russia. Oil prices started the day by declining due to growing concerns about the impact of U.S. tariffs and increased production from the OPEC+ alliance.

Price Movements in Latest Trading

• Brent crude rose by 0.53%, reaching $70.73 per barrel.
• U.S. West Texas Intermediate crude rose by 37 cents, reaching $67.40 per barrel.

Last week saw the seventh consecutive weekly loss for West Texas Intermediate crude, marking the longest losing streak since November 2023. Meanwhile, Brent crude fell for the third consecutive week.

Impact of U.S. Tariffs on Global Markets

President Donald Trump’s protectionist policies caused disruption in global markets. Trump imposed tariffs and then postponed them on the largest oil suppliers to the U.S., such as Canada and Mexico, while also raising tariffs on Chinese goods. China and Canada responded by imposing counter-tariffs.

Tamas Varga, an analyst at “PVM,” pointed out that investors view the uncertainty surrounding U.S. tariffs negatively. However, potential sanctions against Iran and Russia may provide short-term support for prices.

U.S. Sanctions on Russia and Iran

Oil prices recovered from their lowest levels in 6 months on Friday after Trump stated that the U.S. would impose tougher sanctions on Russia if it failed to reach a ceasefire agreement with Ukraine. Sources also told Reuters that the U.S. is considering easing sanctions on Russia’s energy sector if Russia agrees to end its war with Ukraine.

Alexander Novak, Russia’s Deputy Prime Minister, stated that OPEC+ could reverse its decision if market imbalances occur.

Trump is also seeking to curb Iranian oil exports as part of efforts to pressure Iran to halt its nuclear program. In contrast, Iranian Supreme Leader Ayatollah Ali Khamenei stated on Saturday that Iran will not succumb to negotiations.

Investors Focused on Supply and Demand Reports

Later this week, investors will assess the monthly reports from the International Energy Agency (IEA) and OPEC regarding oil supply and demand forecasts.

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Currency Markets: Dollar Declines, Safe-Haven Assets Rise

The dollar continued its losses after weak performance last week due to concerns about potential weakness in the U.S. labor market. At the same time, concerns about a global trade war prompted investors to seek safe-haven assets, causing the Japanese yen and Swiss franc to rise.

Impact of Trade Tensions on Markets

Ongoing trade tensions around the world due to tariffs imposed by Trump disrupted markets. As the U.S. economy slows down, investors lost confidence in the dollar. In currency futures markets, investors reduced their long positions in the dollar to $15.3 billion from the 9-year high of $35.2 billion in January.

Rise of Safe-Haven Currencies

Investors seeking to avoid risk turned to buy Japanese yen and Swiss franc, driving both currencies to their highest levels in months. The yen rose by 0.8% to $146.86, just below its 5-month high achieved on Friday.

Meanwhile, the Swiss franc reached its highest level in 3 months at $0.87665 in early trading, before falling back to $0.8765 in the latest trades. The euro rose by 0.14% to $1.0848, supported by financial reforms in Germany.

Dollar Index Nearing Its Lowest Level in 4 Months

The U.S. Dollar Index, which measures the U.S. currency against 6 other currencies, stood at 109.72 on Monday, remaining near its lowest level in 4 months reached last week. The dollar lost more than 3% last week against its major rivals, recording its worst weekly performance since November 2022.

Trump’s Comments Spark Concerns About U.S. Economy

Concerns grew after Trump refrained from speculating on whether the U.S. would face a recession in an interview with Fox News. These concerns, along with the effects of tariffs on Mexico, Canada, and China, led to a loss of confidence in the U.S. economy.

Trump stated during the program: “There is a transition period because what we are doing is very big. We are bringing wealth back to America.”

Investors’ Stance on Economic Risks

Tony Sycamore, a market analyst at “IG,” said that Trump’s comments were exactly the kind of remarks that high-risk assets do not want to hear after 3 difficult weeks in the markets.

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Sources: Bloomberg, Reuters, Market Watch