Reuters | Oil prices go up for concerns about Venezuela’s supply

Petroleum prices rose on Wednesday, as concern for a more limited global offer increased after the US threat of imposing tariffs on countries that buy Venezuelan crude, along with a greater fall than expected in American crude oil inventories.

Reuters

Brent crude futures rose 71 cents, or 0.97%, $ 73.73 per barrel at 12:56 GMT, its highest level since February 28. The future West Texas intermediate from the US. UU. 68 cents, or 0.99%, to $ 69.68 per barrel.

The Venezuelan oil trade with China, its main buyer, stagnated on Tuesday after the order of US President Donald Trump that threatened to impose tariffs on countries that bought Caracas, days after the United States imposed sanctions on Chinese imports from Iran.

On Monday, Trump signed an executive order that authorizes his administration to impose 25%general tariffs, by virtue of the Law of International Emergency Emergency Powers of 1977, to imports from any country that bought crude oil and Venezuelan liquid fuels. «The discount on Venezuela’s exports could reach 35%, and marketing difficulties could generate bottlenecks that could lead to production stops of up to 400,000 barrels per day, more than half of Venezuela’s exports,» said Barclays analysts in a note.

Venezuela could potentially lose 4.9 billion dollars in revenues, more than half of its oil exports or more than 10% of GDP, according to analysts.
Oil is the main export product of Venezuela, and China is already subject to American import tariffs.

Chinese merchants and refiners claimed to be waiting to see how the order would be implemented and if Beijing would order them to suspend purchases.

«Physical markets are contracting as flows deviate due to the American sanctions series,» said Ashley Kelty, Panmure Liberum analyst.

Last week, Washington also imposed a new round of sanctions on Iran’s oil sales, aimed at entities such as Shouguang Luqing Petrachemical, an independent refinery in the province of Shandong, in eastern China, already ships that supplied oil to these plants in China, the main buyers of Iranian crude.

«OPEC+ could be increasing production in anticipation of possible US sanctions, which would help compensate for a loss of up to 1.5 million barrels per day of Iranian exports without destabilizing global oil prices,» said Jorge León, head of Geopolitical Analysis of Rystad Energy.

The market was also promoted by the data of the American Petroleum Institute (API), which showed that the Crude inventories of the United States fell by 4.6 million barrels last week, a sign of a strong demand for fuel in the largest economy in the world.

Analysts surveyed by Reuters expected a decrease of 1 million barrels.

The official US government data on crude oil inventories will be published on Wednesday.

In order to limit oil prices, USA. Uu. He reached agreements with Ukraine and Russia to stop attacks into the sea and against energy objectives, and Washington agreed to boost the lifting of some sanctions against Moscow.

Both kyiv and Moscow claimed that they would trust Washington to enforce the agreements, although they expressed skepticism that the other party follow them.

The rise in oil prices is a temporary phenomenon, since the possible economic slowdown due to Trump tariffs slows the price increase, said Priyanka Sachdeva, senior market analyst at Phillip Nova.