Trump's Sanctions on Venezuela Raised Oil Prices

Trump's Sanctions on Venezuela Lead to Oil Market Increase

U.S. President Donald Trump's directive to expand the scope of sanctions on Venezuela by imposing a full blockade on all oil vessels in the region has resulted in a nearly 2% increase in global crude oil prices. This development has brought rising geopolitical concerns back to the forefront, overshadowing the recent negative expectations regarding fuel demand among the public.

Severe Sanctions on Venezuela

The U.S. administration has intensified sanctions by designating Venezuela's leadership as a “foreign terrorist organization.” During this process, the U.S. Coast Guard has seized a sanctioned vessel off the coast of Venezuela. Additionally, the uncertainty surrounding the technical details of the blockade and the level of Coast Guard participation in the operations continues with increased naval presence.

Possible Impact on Supply Chain

While the effects on the supply chain are not yet clear, it appears that Chevron is continuing its imports of crude oil from Venezuela under a special permit from the U.S. Department of the Treasury. Venezuela’s share of global oil supply is currently about 1%; a significant portion of this process is particularly directed towards China. China's share of total oil imports is recorded to be around 4%.

Recent Stock Data Supports Prices

Stock data from the U.S. is another factor supporting oil prices. According to preliminary data from the American Petroleum Institute, U.S. oil stocks decreased by 9.3 million barrels last week. This figure stands out as significantly higher than analysts' expectations (a decrease of 1.1 million barrels). Investors are awaiting the official report from the Energy Information Administration (EIA) to clarify the extent of this contraction.