Oil prices rose on news of further energy sanctions against Russia and a blockade against Venezuela
Oil prices rose as the US prepared to impose further energy sanctions on Russia if Moscow rejects a peace deal, and news of a blockade against Venezuela. Market participants are assessing the supply risks created by the blockade of Venezuelan oil tankers.
Trump announced the blockade on sanctioned tankers on Tuesday, but the implementation is unclear. Venezuelan crude oil accounts for 1% of the global oil supply. Weak demand and a crude oil surplus will affect China, the largest buyer.
Brent crude rose 42 cents, or 0.7%, to $60.10 a barrel as of 02:56 GMT. WTI, after rising more than a dollar after the market open, gained 44 cents, or 0.79%, trading at $56.38 a barrel.
On Wednesday, it was reported that the US was preparing another round of sanctions targeting Russia's energy sector if Moscow does not reach a peace agreement with Ukraine.
Further measures targeting Russian oil could pose an even greater supply risk than Trump’s announcement on Tuesday that the US would block sanctioned tankers entering and exiting Venezuela.
Given the oversupply outlook and Brent trading around $60 a barrel, Trump is likely to be more aggressive with sanctions.
The US is targeting Russia’s clandestine fleet used to transport sanctioned oil and the traders who transport it worldwide, and new measures are likely to be announced as early as this week.
Putin, following days of fruitless talks, threatened to forcibly seize more Ukrainian territory if the proposed solutions are not followed.
The Venezuela sanctions risk jeopardizing Venezuelan oil exports of 600,000 barrels per day, mostly to China, but exports of 160,000 bpd to the US are likely to continue. In this context, Chevron said its ships continue to move to the U.S. under a prior authorization from the U.S. government.
According to sources and customs data, state oil company PDVSA has resumed crude oil and fuel shipments after suspending operations due to a cyberattack.
How the U.S. blockade would be implemented was unclear. Last week, the U.S. Coast Guard took an unprecedented step by seizing a Venezuelan oil tanker, and sources said the U.S. is preparing for more such interventions.
Venezuelan crude oil accounts for about 1% of global supply. It sends a large portion of this to China, but market sources say weak demand and excess crude oil in floating storage in Asia are limiting its market impact on the world's largest importer.
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