Trump’s new decision on Venezuela, oil prices increase in the world market

Oil prices increased by 2 percent after imposing sanctions on Venezuela.

US President Donald Trump's move has created new uncertainty in the world oil market. Trump has ordered a complete blockade on all authorized oil tankers entering and leaving Venezuela. After this, geopolitical tensions in the oil market increased.

According to a Reuters report, oil prices in the international market increased by more than 2 percent on Wednesday (December 17). At 10:18 GMT on that day, the price of Brent crude futures was $60.33 per barrel, which is $1.41 cents or 2.4 percent higher. At the same time, the price of US West Texas Intermediate (WTI) crude oil was $56.69 per barrel, which is $1.42 cents or 2.6 percent higher.

Earlier, the progress in the Russia-Ukraine peace talks raised expectations of increased supply in the market. This also raised the possibility of Western sanctions being eased and put pressure on prices in the hope of increasing supply. In addition, concerns about weak global demand have brought down oil prices in the market. Oil prices settled at their lowest level in five years last fiscal year.

Meanwhile, Trump on Tuesday ordered a ban on all sanctioned oil tankers from entering and leaving Venezuela and said that he now considers the Venezuelan regime a “foreign terrorist organization.” ING analyst Warren Patterson said, “There has been a lot of talk in the market about the risk posed by Russia. But there is also a clear risk to Venezuelan oil supplies.

The comments come at a time when the United States seized an embargoed tanker off the coast of Venezuela a week ago. However, it is not yet clear how many tankers will be covered by the blockade and how the United States will enforce the blockade. There are also questions about whether Trump can use the Coast Guard. However, the US has recently deployed warships to the region.

While many of the ships that are pumping oil in Venezuela are under sanctions, there are some tankers that are carrying Venezuelan oil from Iran and Russia, but are not sanctioned. Even a tanker chartered by Chevron is taking Venezuelan oil to the US, which has previously been approved by Washington.

“Venezuelan oil production is about 1 percent of global production. But supply is concentrated among a limited number of buyers. China is the largest buyer of Venezuelan oil, accounting for about 4 percent of the country’s total oil imports.”

On the other hand, the decline in oil inventories in the US has also had a major impact on the market. According to market sources, the country’s crude oil inventories fell by 9.3 million barrels last week.