China Suspends Purchases of Venezuelan Oil: Implications for the Global Market
26 March 2025 10:08
Oil prices rose on Wednesday amid supply concerns as the United States stepped up efforts to limit Venezuelan and Iranian oil exports. Additional support for the market was provided by a significant reduction in US oil inventories, which exceeded analysts’ expectations, "Komersant Ukrainian" reports citing Reuters.
Futures for Brent crude oil rose by 15 cents (0.21%) to reach $73.22 per barrel as of 09:23 Kyiv time. Meanwhile, futures for US West Texas Intermediate (WTI) rose by 16 cents (0.23%) to $69.16 per barrel. Both indicators reached a three-week high the day before.
“Oil prices have maintained an uptrend since the Trump administration imposed sanctions on Venezuelan oil, which has increased supply concerns,”
– said Priyanka Sachdeva, Senior Market Analyst at Phillip Nova.
US sanctions hit China
On Monday, former U.S. President Donald Trump signed an executive order authorizing a general 25% tariff on imports from any country that buys Venezuelan crude oil and liquid fuels. Oil is Venezuela’s main export commodity, and China remains the largest buyer of its crude, which is already suffering from US trade duties.
The supply of Venezuelan oil to China was suspended on Tuesday as Chinese traders and refiners await clarification on the practical implementation of the order and Beijing’s position on further purchases.
Last week, the US also introduced a new package of sanctions against Iranian oil sales. The restrictions apply to companies such as Shouguang Luqing Petrochemical, an independent refinery in China’s Shandong province, as well as to ships that supplied oil to such refineries. China is the largest buyer of Iranian oil.
Читайте нас у Telegram: головні новини коротко
The market was also influenced by data from the American Petroleum Institute (API), which showed that crude oil stocks in the United States last week fell by 4.6 million barrels. This indicates high demand for fuel in the world’s largest economy. For comparison, analysts polled by Reuters expected a decline in stocks of only 1 million barrels.
At the same time, analysts note that the rise in oil prices may be temporary, as the Trump administration’s imposition of trade tariffs could slow global economic growth, limiting further oil price increases.
Peace talks
An additional factor that restrained the growth of oil prices was the report that the United States reached agreements with Ukraine and Russia on a temporary cessation of attacks on maritime and energy facilities. Washington agreed to consider easing some of the sanctions against Moscow in exchange for this.
Ukraine and Russia said they rely on the US to enforce the agreements, although both sides expressed doubts about each other’s compliance.
Outlook
Despite the supply risks, executives at the world’s largest commodity trading companies expect the oil market to remain well supplied this year and prices to remain moderate as expectations for global demand growth remain.
