Oil prices rise on reports of new US sanctions on Russia, Venezuela blockade
Business
US West Texas Intermediate (WTI) crude was up 44 cents, or 0.79%, at $56.38 per barrel at 0256 GMT. Brent crude rose 42 cents or 0.7% to $60.10 per barrel
BEIJING (Reuters) – Oil prices rose on Thursday following reports that the US was preparing new sanctions on Russian oil if Moscow does not agree to a Ukraine peace deal, as market participants assessed the supply risks posed by a blockade of Venezuelan oil tankers.
US West Texas Intermediate (WTI) crude was up 44 cents, or 0.79%, at $56.38 per barrel at 0256 GMT, paring some gains after initially rising more than a dollar after the market opened. Brent crude rose 42 cents or 0.7% to $60.10 per barrel.
On Wednesday, Bloomberg reported that the US is preparing another round of sanctions on Russia's energy sector in case Moscow doesn't agree to a peace deal with Ukraine, citing people familiar with the matter. A White House official told Reuters President Donald Trump had not made any decisions on Russian sanctions.
Further measures targeting Russian oil could pose an even bigger supply risk to the market than Trump's Tuesday announcement that the US would blockade sanctioned tankers entering and leaving Venezuela, ING analysts said in a note.
"Given the surplus outlook and Brent trading around $60 per barrel, Trump has room to be more aggressive with sanctions," ING said.
The Bloomberg report said that the US was considering targeting Russia's shadow fleet of vessels used to transport sanctioned oil and the traders who moved them around the globe, with the potential to unveil new measures as early as this week.
Russian President Vladimir Putin on Wednesday threatened to take more of Ukraine's land by force if Europe did not engage with US proposals for a settlement, following days of talks that have yet to bear fruit.
The Venezuela blockade puts at risk 600,000 barrels per day (bpd) of Venezuelan oil exports, mostly to China, but 160,000 bpd of exports to the US will likely continue, ING said. Chevron vessels were continuing to depart for the US under a previous authorisation from the US government.
Most other Venezuelan exports remained on hold on Wednesday, although state oil company PDVSA restarted loading crude and fuel cargoes after suspending operations because of a cyberattack, sources and customs data indicated.
It was not clear how a US blockade would be enforced. The US Coast Guard last week took the unprecedented step of seizing a Venezuelan oil tanker and sources said the US was preparing for more such interdictions.
Venezuelan crude makes up around 1% of global supplies. It sends most of that to China, but market sources say weak demand and a surfeit of crude in floating storage in Asia are keeping the market impact on the world's biggest importer limited.
