Trump's Sanctions on Venezuela Increased Oil Prices

Trump's Venezuela Sanctions Cause Increase in Oil Markets

U.S. President Donald Trump’s directive to expand the scope of sanctions against Venezuela by initiating a complete blockade on all oil vessels in the region has led to an approximately 2% increase in global crude oil prices. This development has brought geopolitical concerns back to the forefront, overshadowing the negative fuel demand expectations that have been present in the public discourse recently.

Harsh 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 off the coast of Venezuela. Additionally, with the increase in naval presence, uncertainties regarding the technical details of the blockade and the involvement level of the Coast Guard in operations continue to persist.

Potential Effects on the Supply Chain

While the effects on the supply chain have yet to become clear, it has been observed that Chevron has continued to import crude oil from Venezuela under a special permit obtained from the U.S. Department of the Treasury. Venezuela's share in global oil supply currently stands at approximately 1%; a significant portion of this is directed towards China. China's share in total oil imports is recorded at around 4%.

Recent Stock Data Supports Prices

Stock data coming 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. 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 clarity on the magnitude of this contraction in the upcoming official report from the Energy Information Administration (EIA).