Oil rises after Trump orders blockade of tankers off Venezuela's shores

Oil rebounded after US President Donald Trump ordered a naval blockade of unsanctioned oil tankers traveling to and from Venezuela. Quotes of Brent and WTI rose by more than 1%, breaking a four-day series of declines caused by fears of a global oversupply of raw materials.

Quotes of the benchmark Mark Brent rose on December 17 by 1.2% - above $ 59 per barrel - after falling by more than 5% in the previous four sessions amid concerns about the growing global oversupply of oil. The North American grade WTI rose by 1.3% to $56. At the end of trading on December 16, the price of WTI was fixed at $55.27 per barrel - the lowest since February 2021, notes Reuters.

The reason for the rise in oil prices was Trump's order to block off the coast of Venezuela - the country with the world's largest oil reserves and an OPEC member - all tankers hit by U.S. sanctions. "Venezuela is completely surrounded by the largest armada in South American history," Trump wrote on Truth Social on the night of Dec. 17. - Today I am ordering a complete and total blockade of all unsanctioned oil tankers traveling to and from Venezuela." The reason for this move, the White House head called "asset theft, terrorism, drug smuggling and human trafficking" by the Nicolas Maduro-led "Venezuelan regime," which Washington recognized as a terrorist organization.

The accumulated volumes of Venezuelan oil in tankers across Asia will soften any blow to its buyers in China, but prolonged disruptions in exports may force refiners to look for more expensive alternatives, Bloomberg writes. If the embargo remains in place for some time, the loss of nearly a million barrels per day of oil supply could push quotes up, Reuters reported.

David Goldwyn, a former U.S. State Department energy diplomat, believes that if Venezuela's embargo-affected exports are not replaced by increased OPEC reserve capacity, the impact of the embargo on oil prices could be between five and eight dollars a barrel.

Today's scale of price movement indicates that the market is "not overly concerned" about Trump's statement, stated ING commodity strategist Warren Patterson. "The oil market has been generally calm about supply risks recently, given the scale of the surplus expected through 2026," the expert said.

Trump's statement comes days after the U.S. arrested a Skipper tanker full of Venezuelan oil and the White House signaled that more ship seizures would follow. The threat has reduced the number of ships waiting to call at Venezuelan ports from about 45 to a dozen, The Wall Street Journal reported, citing maritime traffic data.

The last time the U.S. imposed a full naval blockade on Cuba was in 1962 to stop Soviet missile shipments to the island. Trump's actions can hardly be considered a full blockade - U.S. supermajor Chevron, which the White House has authorized to produce and export oil from Venezuela, continues to operate smoothly, the WSJ notes.

This article was AI-translated and verified by a human editor