Trump's Venezuela Sanctions Raised Oil Prices

Trump's Venezuela Sanctions Boost Oil Markets

U.S. President Donald Trump’s directive to broaden the scope of sanctions against Venezuela, implementing a full blockade on all oil ships in the region, has led to an almost 2% increase in global crude oil prices. This development has brought rising geopolitical concerns back to the forefront, overshadowing the negative fuel demand expectations that have been present in the public eye recently.

Harsh Sanctions Against 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 ship off the coast of Venezuela. Additionally, uncertainty remains regarding the technical details of the blockade, as well as the Coast Guard's level of participation in the operations amidst increased naval presence.

Potential Effects on the Supply Chain

While the impact on the supply chain is not yet clear, it appears that Chevron is continuing to import crude oil from Venezuela with a special license from the U.S. Department of the Treasury. Currently, Venezuela accounts for about 1% of global oil supply, with a significant portion being exported, particularly to China. China's share of total oil imports is recorded at around 4%.

Recent Stock Data Supports Prices

Stock data from the U.S. represents another factor supporting oil prices. According to preliminary data from the American Petroleum Institute, oil stocks in the U.S. fell by 9.3 million barrels last week. This figure significantly exceeds analysts' expectations of a 1.1 million barrel decrease. Investors are now awaiting clarification on the extent of this contraction in the upcoming official report from the Energy Information Administration (EIA).