US Takes Control of Venezuela, Oil Prices Rise Slightly
Oil prices rose slightly as market participants digested the United States' new move to tighten control over Venezuela. Brent returned to trading above $60/barrel after falling around 3% in the last two sessions, while WTI held steady at around $56/barrel.
This increase occurred as Washington prepared a plan to manage Venezuelan oil sales sustainably, including a strategy of selling stored crude first, then moving on to selling the remaining Venezuelan oil supply. The US government also stated that the oil had already begun to be marketed.
On the Venezuelan side, PDVSA stated that it was negotiating with Washington for a sales scheme similar to the Chevron framework. Under the plan, the US would reportedly have some control over PDVSA's sales process. At the same time, President Donald Trump is encouraging US companies to rebuild Venezuela's weakened energy industry and is scheduled to meet with energy executives on Friday. The US government has also begun selectively easing sanctions as part of this strategy.
Several companies are also beginning to prepare. Citgo—a US refinery indirectly owned by Venezuela—is reportedly considering resuming purchases for the first time since supplies were cut off in 2019 due to sanctions. Trafigura has also expressed interest, while Chevron is also reportedly in discussions to extend its operating license in Venezuela.
Trump previously stated that Venezuela would hand over up to 50 million barrels to the US (worth over $2 billion), with the cargoes sold and the proceeds claimed to benefit both parties. The sales revenue is said to be held in a US Treasury account, and the market expects Venezuelan oil flows to be “rerouted” and “reshuffled,” which could become a key theme in the near future—with China expected to be one of the most affected.
China has been a major buyer of Venezuelan oil, which is sold at a significant discount following sanctions, and Beijing has criticized US pressure as “bullying.” On the market side, the potential for higher Venezuelan exports adds to supply amidst already loose global supply conditions as OPEC+ and other producers increase production—even as Canadian crude prices are already under pressure. However, the US naval blockade remains in effect: the US has seized two more sanctioned tankers, including the Bella 1, which evaded the attack and was eventually intercepted south of Iceland. In midday trading in Singapore, Brent rose 0.5% to $60.27, and WTI rose 0.5% to $56.27.
Key Points:
- Oil edged higher as the market assesses the US plan to sustainably manage Venezuelan oil sales
- Brent returns above $60, WTI holds around $56 after two sessions of decline
- US starts with stored crude sales, then moves on to further Venezuelan supplies; oil is said to have been marketed
- PDVSA is negotiating a Chevron-like scheme; Citgo, Trafigura, and Chevron are also on the radar for next steps
- Supply risks increase and geopolitical tensions rise: US continues blockade and tanker seizures, China potentially most affected (asd)
Source: Newsmaker.id
