Oil Gains With Venezuelan Blockade, Russian Sanctions In Focus

Oil extended gains after bouncing off a four-and-a-half-year low, as investors weighed geopolitical risks from Venezuela to Russia against a still-bearish supply outlook.

West Texas Intermediate traded just below $57 a barrel, after adding 1.2% on Wednesday, while Brent closed a little under $60. The US is preparing a fresh round of sanctions on Russia’s energy sector to spur a peace deal in Ukraine and has declared a blockade of Venezuelan oil exports, raising concerns of a deepening supply outage.

President Donald Trump said the US wants back its Venezuelan oil rights and land, accusing Caracas of taking US “energy rights.” Meanwhile, Washington is considering options such as targeting Russia’s so-called shadow fleet of oil tankers and traders who facilitate such exports, people familiar with the matter said.

Geopolitical tension is lending short-term support for futures, propping up WTI after it fell below $55 earlier this week for the first time since February 2021. Meanwhile, signs of market weakness are emerging from the Middle East to the US, as investors brace for a glut heading into next year.

In the US, a government report on Wednesday showed a modest drawdown in crude stocks, while holdings of gasoline and distillates both grew.

Meanwhile, BP Plc Chief Executive Officer Murray Auchincloss is stepping down after less than two years at the helm. The British oil major has appointed its first female head. Meg O’Neill, the boss of Australian energy company Woodside Energy Ltd., will take over in April.