On March 20, 2025, oil prices surged significantly after the US announced a new round of sanctions against Iran. That evening, oil prices rebounded from intra-day lows, with gains approaching 3%. The sanctions primarily targeted 12 entities, including an independent refinery in Asia, and froze 8 ships responsible for transporting Iranian oil. The U.S. Treasury Department stated these ships were part of Iran's "shadow fleet," supplying crude to private refineries.
Since February this year, the Trump administration has announced four rounds of sanctions aimed at reducing Iran's oil exports, preventing funding for its nuclear weapons program, and its support for terrorist organizations. The US government believes Iran's oil exports are a critical economic source for its regime, and sanctions will further weaken Iran's economic power on the international stage.
The market reacted strongly to these sanctions, particularly the first measures targeting refineries. A refinery in Shandong Province was notably impacted. Previously, to avoid the risks of sanctions, the Shandong Port Group had already banned ships listed by the US Treasury’s Office of Foreign Assets Control (OFAC) from docking at its ports, further exacerbating tensions in the export of Iranian crude oil amid these sanctions.
The sanctions had a clear impact on the crude oil market, with prices rising in response, especially SC crude, which saw larger gains surpassing those in Western markets. This indicates that as the number of buyers for Iranian crude decreases, global supply disruptions intensify, potentially posing greater risks to oil prices.
In overall assessment, this round of sanctions could bring a risk premium of $3-5 to oil prices. Whether prices can maintain strong performances ahead will depend on the crude oil market's ability to adjust to supply disruptions. Sudden news has driven significant fluctuations in oil prices, and investors should be aware of shifts in market dynamics.
