Oil prices experienced a notable surge in Asian trading on Thursday following President Donald Trump’s decision to blockade tankers involved in Venezuelan oil exports. West Texas Intermediate (WTI) crude futures saw a significant increase, rising by 1.75 per cent to reach $US56.92 per barrel. The initial surge saw crude futures open a dollar higher as markets reacted to the geopolitical development.
The catalyst for this price movement was Trump’s announcement on Tuesday, designating President Nicolas Maduro’s administration in Venezuela as a foreign terrorist organisation. As part of this designation, he ordered a blockade on all sanctioned oil tankers either entering or leaving the South American nation. The blockade is intended to increase pressure on the Maduro regime by cutting off a crucial source of revenue.
The news of the blockade immediately impacted oil markets, triggering a rise of over 1 per cent in the previous session. This rebound comes after oil prices had slumped to five-year lows, partly influenced by positive developments in Ukraine peace talks. Progress in those talks had raised the possibility of an easing of sanctions on Russia, which would increase global oil supply.
While the situation remains fluid, the US action against Venezuela has introduced fresh uncertainty into the global oil market. The blockade is expected to constrain Venezuelan oil exports, potentially leading to tighter supplies and upward pressure on prices in the short term. Market participants will be closely monitoring the situation and its potential impact on the global energy landscape.
