Oil Prices Climb as US blocks Venezuelan Tankers, Eyes on Russia-Ukraine Talks

Summary

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Brent and WTI prices rise amid Venezuelan tanker blockade
Russia-Ukraine peace talks impact oil market sentiment
U.S. sanctions increase pressure on Venezuela’s oil exports

(Reuters) – Oil prices edged up on possible disruptions from a U.S. blockade of Venezuelan tankers as the market waits for news about a possible Russia-Ukraine peace deal.

Brent futures rose 65 cents, or 1.1%, to settle at $60.47 per barrel, while U.S. West Texas Intermediate (WTI) crude rose 51 cents, or 0.9%, to settle at $56.66.

That put Brent and WTI down about 1% this week after both crude benchmarks fell about 4% last week.

In other energy markets, a recent drop in U.S. gasoline futures to a four-year low cut 321- and gasoline crack spreads, which measure refining profit margins, to their lowest since February.

“The (oil) complex is posting small gains in holding above lows established earlier this week as it awaits further guidance regarding Ukraine/Russian peace talks as well as fresh headlines out of Venezuela as to the potential impact of the apparent Trump tanker blockade,” analysts at energy advisory firm Ritterbusch and Associates said in a note.

As U.S. President Donald Trump seeks an end to Europe’s deadliest conflict since World War Two, the onus was on Ukraine and Europe to make the next move toward peace.

European Union leaders decided on Friday to borrow cash to loan 90 billion euros ($105 billion) to Ukraine to fund its defense against Russia for the next two years rather than use sidestepping divisions over an unprecedented plan to finance Kyiv with Russian sovereign cash.

Putin offered no compromise on Friday on his terms for ending the war in Ukraine and accused the European Union of attempting “daylight robbery” of Russian assets.

Ukraine, meanwhile, struck a Russian “shadow fleet” oil tanker in the Mediterranean Sea with aerial drones for the first time, an official said on Friday, reflecting the growing intensity of Kyiv’s attacks on Russian oil shipping.

VENEZUELA BLOCKADE

U.S. Secretary of State Marco Rubio on Friday told reporters that the United States is not concerned about an escalation with Russia when it comes to Venezuela, as the Trump administration builds up military forces in the Caribbean.

Trump told NBC News in an interview that he was leaving the possibility of on the table.

Uncertainty over how the U.S. would enforce Trump’s intent to block sanctioned tankers from entering and leaving Venezuela tempered geopolitical risk premiums, IG analyst Tony Sycamore said.

Venezuela, which pumps about 1% of global oil supplies, on Thursday authorized two unsanctioned cargoes to set sail for China, said two sources familiar with Venezuela’s oil export operations.

A sanctioned tanker carrying some 300,000 barrels of naphtha from Russia entered Venezuelan waters late on Thursday, while three others also under sanctions either stopped navigation or began redirecting course in the Atlantic Ocean, ship tracking data showed.

The U.S. on Friday imposed sanctions on family members and associates of Nicolas Maduro and his wife, as Washington ratchets up pressure on the Venezuelan president.

U.S. PRODUCTION WORRIES?

The rig count in the Permian Basin in West Texas and eastern New Mexico, the biggest U.S. oil-producing shale formation, fell by three this week to 246, the lowest since August 2021, according to data from U.S. energy services firm Baker Hughes.

The rig count is an early indicator of future output. A lower count can point to a decline in future output.

Reporting by Scott DiSavino in New York and Anna Hirtenstein in London; Additional reporting by Enes Tunagur and Sudarshan Varadhan; Editing by Alexander Smith, Matthew and Diane Craft