Investing.com — Oil prices stabilized Thursday after sharp losses a day earlier as the U.S. reimposed sanctions on Venezuela’s oil exports, though sentiment remained depressed as concerns about an escalation between Iran and Israel that would threaten to spark a regional conflict in the Middle East. East.
At 19:30 ET (18:30 GMT), the price stood at $87.29 per barrel, while at 21:51 ET (01:51 GMT) it rose 0.1 to $82.73 per barrel. Both contracts fell about 3% on Wednesday.
US to reimpose sanctions on Venezuela
U.S. officials said Wednesday they will not renew a permit allowing Venezuela to export oil and reimpose sanctions after President Nicolas Maduro failed to keep initial promises to hold national elections.
Still, the move fell a step short of the “maximum pressure” policy adopted under former US President Donald Trump, while officials signaled they were still hopeful the country would hold fair elections.
Venezuela’s oil exports grew 12% to about 700,000 barrels per day in 2023 after the US eased some sanctions on the country’s oil industry. Although Venezuela no longer pumps oil, the country has a huge stockpile of reserves.
Geopolitical tensions in the Middle East continue to ease from high levels, forcing traders to unwind the premium priced into oil prices amid a lack of response from Israel to an attack on Iran. But some continue to warn that the risk of another flare-up remains worrisome.
“The perception that tensions in the Middle East have eased is also weakening oil prices until the next flare-up…,” Scotiabank Economics said in a note.
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US inventories are growing faster than expected
The move could potentially further tighten global supply, but has had limited impact after data showed the U.S. grew more than expected for the fourth week in a row, largely thanks to strong manufacturing.
These figures further undermined expectations that global markets will remain tight in the coming months, especially as the US also maintained the pace of oil exports.
But excessive supply and inventories showed that demand for fuel remained high among the world’s largest consumer.
Markets still remained tense due to heightened geopolitical tensions in the Middle East, although the lack of immediate retaliation by Israel following an attack by Iran led to some expectations that the situation will not deteriorate.
Significant uncertainty remains about Israel’s possible response to Iran’s attack this weekend.
“US Treasury Secretary Janet Yellen said the US will implement additional sanctions on Iran in response to the attack,” ING analysts said in a note.
“However, sanctions are already in place for oil, the problem is that they have not been strictly enforced in recent years. And the big question is whether they will now be more strictly enforced. Will the Biden administration want to risk tightening the oil market and driving up prices as we get closer to the US elections later this year?”
(Peter Nurse, Ambar Warrick contributed to this article.)
