Trump's Venezuela Sanctions Increased Oil Prices

Trump's Sanctions on Venezuela Lead to Oil Price Increase

U.S. President Donald Trump’s directive to broaden the scope of sanctions on Venezuela, by imposing a complete blockade on all oil vessels in the region, has led to a nearly 2% increase in global crude oil prices. This development has brought geopolitical concerns back into focus, overshadowing the recent negative expectations for fuel demand in the public eye.

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 the coast of Venezuela. Additionally, uncertainties remain regarding the technical details of the blockade and the extent of the Coast Guard's participation in the operations as the naval presence is increased.

Possible Effects on the Supply Chain

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

Recent Stock Data Supports Prices

Stock data from the U.S. also serves as another factor supporting oil prices. According to preliminary data from the American Petroleum Institute, U.S. oil stocks have 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 clarification on the extent of this contraction in the official report from the Energy Information Administration (EIA).