Oil prices jumped in early Monday trading after the U.S. intercepted a third oil tanker off the coast of Venezuela. U.S. President Donald Trump has announced a “total and complete” blockade of sanctioned Venezuelan oil tankers, while Ukraine has launched a drone strike on a Russian shadow fleet vessel in the Mediterranean.
Venezuela accounts for 1% of global oil supply.
Brent crude for February delivery rose 2% to trade at $61.68 per barrel at 12:24 pm ET on Monday, while WTI crude for January delivery was up 2.03% to trade at $57.67 per barrel.
Chevron Corp. (NYSE:CVX) is currently engaged in talks with the Trump administration over its Venezuelan operations, with Chief Executive Officer Mike Wirth emphasizing that its continued presence there is beneficial to U.S. interests, while Washington’s military buildup in the Caribbean seeks to ramp up pressure on Venezuelan President Nicolás Maduro.
Back in August, Chevron resumed shipments of Venezuelan oil to the U.S. after a 4-month hiatus, averaging just over 100,000 bpd. Whereas the oil giant is the only American energy company that has been authorized to operate in Venezuela, it can only export half of the estimated 240,000 barrels of crude it produces per day. The Treasury Department also banned payments in any currency to Maduro’s government. PDVSA, Venezuela’s state-owned oil company and Chevron’s key partner, controls the barrels delivered to comply with in-kind payments, export some, and use the rest in the domestic market.
Chevron produces and exports heavy crudes in Venezuela, primarily from the Orinoco Belt, upgrading extra-heavy crude into lighter, higher-value synthetic oil (like Hamaca) and also handling Boscan crude, sending these to U.S. refineries for processing.
A potential shift in Venezuela’s political trajectory adds another layer of uncertainty to Chevron’s long-standing position in the country. Any transition away from Maduro could initially tighten global crude supply if instability disrupts output, before triggering a longer-term surge in volumes if a new government courts foreign investment and opens the sector to broader participation.
By Alex Kimani for Oilprice.com
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