Oil prices increased for the first time in three days following Trump’s cancellation of Chevron’s Venezuela license, causing renewed supply concerns. Brent and WTI crude saw slight rises after settling at recent lows. The decision impacts Chevron’s ability to export Venezuelan oil, contributing to market dynamics influenced by geopolitical negotiations and U.S. stockpile trends.
On Thursday, oil prices increased for the first time in three days due to renewed supply concerns after U.S. President Donald Trump announced the cancellation of a license for Chevron to operate in Venezuela. Brent crude futures rose by 24 cents, or 0.33%, to $72.77 per barrel, while U.S. West Texas Intermediate (WTI) crude rose by 18 cents, or 0.26%, to $68.80 per barrel.
This increase followed a significant decline the previous day when oil contracts fell to their lowest since December 10, driven by unexpected growth in U.S. fuel inventories, which suggested weakening demand, alongside ongoing peace negotiations between Russia and Ukraine. As of now, both benchmarks have decreased by approximately 5% in value this month.
Trump’s decision to rescind Chevron’s license, initially granted by former President Joe Biden over two years ago, pertains to the company’s operations in Venezuela, where it exports around 240,000 barrels of crude oil per day—accounting for over a quarter of Venezuela’s total oil production. Consequently, this decision will prevent Chevron from exporting Venezuelan crude.
According to Hiroyuki Kikukawa, president of NS Trading, the news regarding Venezuela prompted a market recovery following the recent decline amidst ceasefire discussions between Russia and Ukraine. Furthermore, potential buying from the U.S. Strategic Petroleum Reserve added support to the market, particularly as WTI prices approached their lowest levels in more than two months.
Last week, Trump stated that his administration intends to rapidly replenish the Strategic Petroleum Reserve, criticizing the Biden administration for utilizing it as a means to lower gasoline prices. Market participants are also closely monitoring developments related to the ongoing Russian-Ukrainian peace talks, with Trump mentioning that Ukrainian President Volodymyr Zelenskiy would visit Washington to finalize an agreement regarding rare earth minerals.
Unexpectedly, U.S. crude oil stockpiles decreased last week due to slight increases in refining activity, although gasoline and distillate inventories surprised with significant gains, according to the Energy Information Administration. Kikukawa remarked that, because this is a seasonal off-peak period, with demand shifting from kerosene to gasoline, the previous sell-off driven by rising product inventories is likely at an end.
In a separate communication, Goldman Sachs asserted that the U.S. administration’s dual objectives of commodity dominance and affordability support the bank’s Brent oil price projection of $70-$85 per barrel, a price range favorable for substantial U.S. supply growth.
In summary, oil prices have risen following President Trump’s decision to revoke Chevron’s operations license in Venezuela, which raises supply concerns. This reversal, coupled with ongoing geopolitical factors and changes in U.S. crude stockpiles, highlights the volatility in the oil market. Analyst insights suggest the market is stabilizing after a recent downturn, with future pricing expectations centered around strategic supply measures.
Original Source: clubofmozambique.com
