Oil prices benefit from tensions in the Middle East and new US sanctions – Commerzbank

FXStreet Insights Team FXStreet

Last week, oil prices recorded their strongest weekly gain since the beginning of January. The Brent oil price thus almost made up for the losses since the beginning of March. The current escalation in the Middle East provided a tailwind, as this justifies a certain risk premium on the oil price, Commerzbank's commodity analyst Carsten Fritsch reports.

Prospect of higher OPEC+ oil supply to limit the upside potential for oil prices

"The ceasefire between Israel and Hamas in the Gaza Strip seems to be on the verge of collapse and the ceasefire between Israel and Hezbollah in Lebanon is also at risk of being put to the test following reciprocal rocket attacks. The recent US attacks on Houthi rebel positions in Yemen could also draw Iran back into the Middle East conflict, as it is supporting the Houthis as a proxy in the fight against Israel. The US government also tightened oil sanctions against Iran last week, including an independent Chinese refinery on the sanctions list for the first time. This could also deter other potential buyers of Iranian oil."

"US President Trump also indicated yesterday that countries that buy oil and gas from Venezuela will be subject to a 25% tariff on all trade with the US from 2 April. Oil prices rose further as a result. This is the most serious sanction threat Trump has made on the oil market to date. Venezuela recently produced a good 900 thousand to just under 1 million barrels per day, depending on the data source, meaning that Venezuela's oil production has doubled since the end of 2020. The last time it was higher was six years ago."

"However, the prospect of higher oil supply from OPEC+ is likely to limit the upside potential for oil prices. In addition, Reuters reported yesterday, citing four informed sources, that OPEC+ also intends to stick to the expansion of oil production planned for May. The production cuts in some countries to compensate for previous excess production are also said to provide scope for this."

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

GBP/USD flirts with weekly highs in the Fed's aftermath

GBP/USD reversed early losses following the Federal Reserve decision to keep rates on hold and neared the 1.3360 level before shedding some ground. Focus shifts to Governor Kevin Warsh's speech, while the Bank of England will announce its monetary policy decision on Thursday.

EUR/USD extends rally pass 1.1450 on Fed's Warsh

EUR/USD trades at fresh weekly highs above 1.1450, following the Federal Reserve monetary policy decision to keep interest rates on hold. The statement showed policymakers remain confident in economic progress while blaming inflation on energy prices. The divided vote among officials put in doubt a September hike, leading to sharp US Dollar losses.

Gold hovers around $4,100 as Fed decision hits the USD

Gold surged following the Federal Reserve's decision to keep the benchmark interest rate unchanged at 3.50%-3.75%. Policymakers noted that inflation remains elevated and that economic activity is expanding at a solid pace despite elevated uncertainty, spurring doubts about a rate hike in September. XAU/USD peaked above $4,100, now battling to retain the level.

No soft target: Warsh vows to return inflation to 2%

The Fed left interest rates unchanged at 3.50%-3.75%, but the decision carried a distinctly hawkish edge as three officials voted for an immediate 25-basis-point increase. Chair Kevin Warsh reinforced that message, insisting there was no tolerance for a softer inflation target and warning that the Fed would not hesitate to act.

How the CLARITY Act unlocks Wall Street’s tokenization pipeline

The United States (US) Digital Asset Market Clarity Act (CLARITY Act), awaiting a full Senate floor vote, promises to unlock Wall Street’s potential to tokenize financial assets, including equities, US Treasuries, private credit, real estate and commodities at a scale that could supercharge the real-world asset (RWA) market from the current $17 billion level to $5.5 trillion by 2030, according to

US Dollar mid-year outlook: Exceptional currency, exceptional risks?

The US Dollar enters the second half of 2026 in a markedly different position from a year ago. The King currency has recovered, reflecting persistent US inflation, changing expectations for Fed policy, geopolitical tensions and renewed demand for defensive assets.