Oil Rises Again: Venezuela & Russia Heat Up the Market
Oil prices rose for a second day as geopolitical risks from Venezuela to Russia outweighed long-standing concerns about a global supply surplus. This means that even though global supply is still considered excessive, the market is still pushing prices up due to fears of political supply disruptions.
In recent trading, WTI rose to near $57/barrel after strengthening by around 1.2% the previous day, while Brent held above $60/barrel. The trigger was Washington's blockade of sanctioned Venezuelan tankers, and Trump's accusation that Venezuela had usurped US "energy rights."
From Russia's perspective, the US is also said to be preparing a new wave of sanctions against the Russian energy sector if President Vladimir Putin rejects the peace deal with Ukraine. One option being discussed is tightening pressure on the "shadow fleet" of tankers and those supporting Russian oil exports.
However, the overall oil market outlook remains less than entirely bullish. Oil remains at risk of a year-on-year decline due to concerns that global supply will outstrip demand. WTI even touched its lowest level since 2021 earlier this week, and several indicators from the Middle East to the US signal a "weak" market.
In Venezuela itself, the situation is even more complicated: storage facilities and tankers at terminals are reportedly filling up quickly. If capacity reaches its maximum, state-owned oil company PDVSA—which produces nearly 1 million barrels per day—could be forced to reduce production or shut down some wells. President Nicolas Maduro has rejected US pressure and asserted that his country will not bow to regime change efforts. (asd)
Source: Bloomberg.com
