Oil prices jumped early on Thursday as concerns about supply with intensified U.S. sanctions on Iran and Venezuela trumped demand woes and the possibility of peace in Ukraine.
As of 10:45 a.m, ET on Thursday, the front-month futures contract of the U.S. benchmark, WTI Crude, was up by more than 2%, trading at $70.09 per barrel, up by 2.14% on the day. The international benchmark, Brent Crude, was up by 1.94% at $73.94.
After falling for most of this week, oil prices reversed course on Thursday morning after U.S. President Donald Trump canceled a sanction waiver for Chevron. The license to Chevron has allowed the supermajor to return to the South American country and become instrumental for the increase of Venezuela’s crude oil production.
Trump cited the lack of electoral reform in Venezuela, along with insufficient action on migration, as reasons for his decision.
Chevron has been exporting some 240,000 barrels of Venezuelan crude to the United States daily thanks to the waiver. The amount constitutes a quarter of Venezuela’s total oil production and generates substantial revenues that stay in the Venezuelan economy.
U.S. imports of Venezuelan crude oil have averaged almost 270,000 barrels per day (bpd) so far this year, according to ING’s commodities analysts.
The increased sanctions pressure on Venezuela adds to President Trump’s “maximum pressure” campaign against Iran, which intensified early this week, when the U.S. imposed additional sanctions on Iran’s shadow fleet.
“The United States will use all our available tools to target all aspects of Iran’s oil supply chain, and anyone who deals in Iranian oil exposes themselves to significant sanctions risk,” Secretary of the Treasury Scott Bessent said on Monday.
Despite the oil price increase early on Thursday, the market remains volatile with choppy trade driven by short-term concerns about supply or demand, waiting for more clarity on tariffs, sanctions, and a possible end to the war in Ukraine.
By Tom Kool for Oilprice.com