Oil rises after Trump revokes Chevron’s license to operate in Venezuela

Oil prices rose more than 1 per cent on Thursday as supply concerns resurfaced after U.S. President Donald Trump’s revoked a license granted to U.S. oil major Chevron to operate in Venezuela.

 

Gains were capped, however, by signs of a potential peace deal in Ukraine, which could result in higher Russian oil flows, and an unexpected rise in U.S. gasoline and distillate stocks.

 

Brent crude oil futures were up 86 cents, or 1.19 per cent, at $73.39 a barrel by 1240 GMT. U.S. West Texas Intermediate crude oil futures rose 78 cents, or 1.14 per cent, to $69.40.

 

The contracts had settled in the previous session at their lowest since December 10.

 

“Prices are stabilizing this morning around their two-month lows after Trump reversed Chevron’s license to export Venezuelan oil,” said PVM analyst Tamas Varga.

 

The Chevron license news means the company will no longer be able to export Venezuelan crude. And if Venezuelan state oil company PDVSA exports oil previously exported by Chevron, U.S. refineries will be unable to buy it because of U.S. sanctions.

“Chevron’s exit could reduce Venezuela (oil) production, giving OPEC+ capacity to increase output. If this occurs, coastal U.S. refiners could incur higher procurement costs,” TD Cowen analysts said in a note.

 

If OPEC+ does not increase supply, it could increase heavy sour prices, which would hit U.S. refiners, the analysts said.

 

Chevron exports about 240,000 barrels per day (bpd) of crude from its Venezuela operations, more than a quarter of the country’s entire oil output.

 

Trump’s involvement in efforts to facilitate a Russia-Ukraine peace deal are also in focus.

 

Trump said Ukrainian President Volodymyr Zelenskiy would visit Washington on Friday to sign an agreement on rare earth minerals, though the Ukrainian leader said the success of talks would hinge on continued U.S. aid.

 

“Markets like clarity as opposed to uncertainty. Unless a clear path is presented on tariffs and Eastern European peace, oil prices will remain on the defensive with sporadic and spontaneous headline-based rallies,” said Varga.

 

U.S. crude oil stockpiles fell unexpectedly last week as refining activity ticked higher, while gasoline and distillate inventories registered surprising gains, the Energy Information Administration said on Wednesday.

 

 

 

 

This article was first reported by Reuters