Oil Prices Climb as Trump Orders Blockade of Sanctioned Venezuelan Tankers

BY COMFORT OGBONNA

Oil prices rose more than 1% on Wednesday after U.S. President Donald Trump ordered what he described as a “total and complete” blockade of all sanctioned oil tankers entering and leaving Venezuela, injecting fresh geopolitical risk into markets already unsettled by weak demand and shifting supply expectations.

Brent crude futures gained 79 cents, or 1.3%, to trade at $59.71 a barrel by early morning GMT, while U.S. West Texas Intermediate crude climbed 77 cents, or 1.4%, to $56.04 a barrel. The rebound followed a sharp selloff in the previous session, when prices hovered near five-year lows amid optimism that progress in Russia-Ukraine peace talks could eventually lead to a relaxation of Western sanctions on Moscow and add more oil to global supply.

Trump’s directive, announced on Tuesday, escalated pressure on Venezuela by targeting sanctioned vessels involved in the country’s oil trade. He also declared that Venezuela’s leadership would now be treated as a foreign terrorist organization, a move that adds legal and enforcement uncertainty for shipping companies, insurers and traders operating in the region.

Market participants estimate the blockade could disrupt between 400,000 and 500,000 barrels of oil per day, a volume that could lift prices by $1 to $2 per barrel if fully enforced. However, traders cautioned that the overall impact may be limited, given Venezuela’s relatively small share of global oil supply and the broader bearish backdrop driven by fragile economic growth.

In Asia, traders said part of Wednesday’s price rise was also driven by technical factors, as buyers returned to the market after crude dipped below the psychologically important $60-per-barrel level a day earlier. Still, sentiment remained cautious, with many investors reluctant to chase prices higher.

The United States last week seized a sanctioned oil tanker off Venezuela’s coast, signaling a tougher enforcement stance, but it remains unclear how many vessels would be affected by the new blockade or how it would be implemented. Questions also remain over whether the U.S. Coast Guard would be used to interdict ships, particularly as American warships have been deployed to the region in recent months.

While many tankers lifting Venezuelan crude are already under sanctions, some vessels transporting oil linked to Iran and Russia are not. In addition, tankers chartered by Chevron continue to ship Venezuelan crude to the United States under a previously granted authorization from Washington. China remains the largest buyer of Venezuelan oil, accounting for about 4% of its total crude imports.

Analysts say the oil market is currently well supplied, limiting the scope for a sustained rally in the near term. However, they warn that a prolonged disruption to Venezuelan exports could gradually tighten supplies, particularly for heavier crude grades, and lend support to prices over time.