Oil prices are going up: what are the reasons?
22 December 13:17
Oil prices are going up on Monday, December 22, after officials reported that an oil tanker was intercepted in international waters off the coast of Venezuela by the US military, which increased uncertainty about supply volumes, "Komersant Ukrainian" reports citing Reuters.
By 08:20 Kyiv time, futures for Brent crude oil rose by 1.04% to $61.1 per barrel, and WTI by 1.1% to $57.14 per barrel.
“The market is beginning to realize that the administration of (US President Donald) Trump will severely curb trade in Venezuelan oil,” said June Guo of Sparta Commodities.
“Oil prices received support from this geopolitical news along with simmering tensions between Russia and Ukraine amid a fundamentally bearish market,” Guo said.
The situation around Venezuela
The blockade of Venezuela could jeopardize about 600 thousand barrels per day of Venezuelan oil exports, mainly to China.
At the same time, supplies to the United States are likely to remain at around 160 thousand barrels per day. Chevron’s vessels continued to ship to the United States with prior permission from the US government.
Most other Venezuelan exports remained suspended, although the state-owned PDVSA resumed loading crude oil and fuel after a pause due to a cyberattack.
“It is unclear how the US blockade will be implemented. Last week, the U.S. Coast Guard took the unprecedented step of seizing a Venezuelan oil tanker, and sources said the U.S. was preparing for more such bans,” Reuters writes.
Venezuelan oil accounts for about 1% of global supplies. The main volumes go to China, but weak demand and excess oil in floating storage facilities in Asia limit the impact of these risks on the market.
