Oil prices rose as focus shifted to the blockade of Venezuelan tankers and Russia-Ukraine talks
Oil prices edged higher as the market awaited news of a possible Russia-Ukraine peace deal, coupled with potential US intervention against Venezuelan tankers. The Russia-Ukraine peace talks are impacting oil market sentiment, and US sanctions have increased pressure on Venezuela's oil exports.
Brent futures rose 65 cents, or 1.1%, to $60.47 a barrel, while WTI gained 51 cents, or 0.9%, to $56.66.
In other energy markets, US gasoline futures fell to their lowest levels in four years, pushing the 321 spread (measuring refinery profit margins) and gasoline crack spreads to their lowest levels since February.
The oil market is posting small gains above the lows formed earlier this week as it awaits further guidance on the Ukraine/Russia peace talks and new news from Venezuela regarding the potential impact of Trump's tanker blockade.
European Union leaders decided on Friday to lend 90 billion euros ($105 billion) to Ukraine to finance its defense against Russia for the next two years.
Is the goal to prolong this bloody war for another two years? Is Ukraine fighting Russia, or are the EU and the US? Unbelievable!
Putin offered no compromise on terms to end the war in Ukraine on Friday and accused the European Union of attempting a "daylight robbery" of Russian assets.
Ukraine, meanwhile, announced on Friday that it had attacked a Russian "shadow fleet" oil tanker in the Mediterranean for the first time with drones, reflecting the increasing intensity of Kiev's attacks on Russian oil tankers.
What compromise is being discussed while Ukraine diversifies its cross-border interventions?
US Secretary of State Marco Rubio told reporters on Friday that with the Trump administration increasing its military presence in the Caribbean, the US is not concerned about an escalation of tensions with Russia when it comes to Venezuela.
Uncertainty surrounding how the U.S. will implement Trump’s intention to block the entry and exit of sanctioned tankers to and from Venezuela is somewhat mitigating geopolitical risk premiums.
Venezuela, which pumps about 1% of global oil supply, allowed two unsanctioned cargoes to depart for China on Thursday.
A sanctioned tanker carrying approximately 300,000 barrels of naphtha from Russia entered Venezuelan waters late Thursday; three other sanctioned tankers either halted their voyages or began changing their routes in the Atlantic Ocean.
The U.S. imposed sanctions on Nicolas Maduro and his wife’s family members and associates on Friday; Washington is increasing pressure on the Venezuelan president.
According to Baker Hughes data, the number of drilling rigs in the Permian Basin in West Texas and Eastern New Mexico, the largest oil-producing shale formation in the U.S., fell by three this week to 246, the lowest level since August 2021.
The number of drilling rigs is an early indicator of future production. A lower number may signal a decline in future production.
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