Trump's Venezuela Sanctions Increased Oil Prices

Trump's Venezuela Sanctions Lead to Increase in Oil Markets

U.S. President Donald Trump’s order to expand the scope of sanctions on Venezuela, implementing a complete blockade on all oil tankers in the region, has resulted in nearly a 2% increase in global crude oil prices. This development brings renewed attention to rising geopolitical concerns, overshadowing the recent negative expectations for fuel demand among the public.

Severe Sanctions on Venezuela

The U.S. administration has intensified sanctions against Venezuela by designating its leadership as a "foreign terrorist organization." In this process, the U.S. Coast Guard has seized a sanctioned vessel near Venezuelan waters. Additionally, uncertainty remains regarding the technical details related to the blockade, and the involvement level of the Coast Guard in operations continues to be unclear.

Potential Effects on the Supply Chain

While the impacts on the supply chain have yet to be clarified, Chevron is still importing crude oil from Venezuela under a special permit from the U.S. Department of the Treasury. Venezuela’s share in the global oil supply is currently around 1%; a significant portion of this is directed towards China. China’s share of total oil imports is recorded to be around 4%.

Recent Stock Data Supports Prices

Recent stock data from the U.S. also constitutes another factor supporting oil prices. According to preliminary data from the American Petroleum Institute, U.S. oil inventories have decreased by 9.3 million barrels last week. This figure stands significantly above analysts' expectations (a decline of 1.1 million barrels). Investors are awaiting clarity on the magnitude of this contraction in the official report from the Energy Information Administration (EIA).