Oil prices extended recent gains on Thursday as concerns over global supply intensified following U.S. President Donald Trump’s decision to impose a blockade on sanctioned oil tankers moving in and out of Venezuela.
By 04:35 ET (09:35 GMT), February Brent crude futures were up 0.4% at $59.93 a barrel, while U.S. West Texas Intermediate (WTI) crude added 0.5% to trade at $56.11 a barrel.
Despite the latest rebound, crude markets remain on track for weekly declines of close to 2%, pressured by expectations of excess supply and speculation around a potential peace agreement in Ukraine. So far this year, U.S. crude prices have fallen roughly 21%, marking their weakest annual performance since 2018, while Brent has dropped just under 20%, its sharpest yearly decline since 2020.
Venezuela and Russia supply risks draw focus
Tensions between Washington and Caracas moved back into the spotlight after Trump announced on Tuesday that the U.S. would block tankers transporting Venezuelan crude that are already subject to American sanctions. The move increases pressure on President Nicolas Maduro’s government and raises the risk of further disruptions to exports from the OPEC member.
Venezuela’s oil shipments have already been limited by years of sanctions, and stricter enforcement could further tighten supply.
“This puts at risk around 600k b/d of oil exports, the majority of which goes to China. However, flows to the US, currently around 160k b/d, will likely continue,” said ING analysts said in a note.
“The key questions are, first, how effective this blockade will be, and second, how long it will last. This will be important in determining the impact on the oil market,” ING analysts added.
Supporting the bullish undertone, media reports suggested the U.S. administration is also considering tougher sanctions on Russia’s energy sector if attempts to reach a peace deal in Ukraine fail. Measures under discussion could target parts of Russia’s oil production, shipping and export infrastructure, potentially restricting flows from one of the world’s largest crude suppliers.
“Given the surplus outlook and Brent trading around $60/bbl, Trump has room to be more aggressive with sanctions,” ING analysts added.
U.S. inventory data offers mixed signals
On the data side, figures from the U.S. Energy Information Administration showed crude oil inventories fell by 1.27 million barrels in the week ended December 12, smaller than the 2.4 million barrel draw forecast by analysts.
The report also highlighted rising fuel inventories, with gasoline stocks increasing by 4.81 million barrels and distillate inventories climbing by 1.71 million barrels. The build in refined products points to softer demand and continues to weigh on the broader outlook for oil markets.