The prices of the two major crude oil grades were up on Monday on fears of supply disruptions in Russia and Venezuela, with Brent crude futures gaining $1.60 or 2.7 per cent to settle at $62.07 a barrel and the US West Texas Intermediate (WTI) crude futures rising by $1.49 or 2.6 per cent to $58.01 a barrel.
The US Coast Guard tried to intercept an oil tanker in international waters near Venezuela on Sunday in the latest escalation between both countries.
On Saturday, US forces intercepted and seized a second oil tanker in international waters off the coast of Venezuela, part of a broader campaign to disrupt sanctioned oil shipments tied to the Maduro government. The US government said these actions are aimed at curbing illicit oil flows that finance criminal activity, with President Donald Trump having announced a blockade of the country last Tuesday.
Following that second seizure, the US Coast Guard reportedly pursued a third tanker, identified by the US as the Bella 1. The vessel being tracked is alleged to be part of a “dark fleet” evading sanctions and is operating under a false flag with a judicial seizure order in place. If intercepted, it would have marked the third such operation in under two weeks.
Market participants see a risk of disruption to Venezuelan oil exports because of the US embargo, having previously downplayed the risk.
Venezuelan crude accounts for 1 per cent of global supply and most of it is bought by China, which is largely shielded from Western sanctions. China, which is the world’s biggest oil importer, on Monday said the US seizure of another country’s ships is a serious violation of international law.
Any sustained disruption in exports, particularly to major buyers such as China, could add to price volatility if buyers are forced to source barrels elsewhere.
Prices also found support as Ukraine damaged two vessels and piers in Russia and sparked a fire in a village on the Black Sea coast in Russia’s Krasnodar region, raising further risk of oil supply disruptions.
Ukrainian forces have increasingly targeted the Krasnodar region’s refineries and fuel depots to disrupt Russia’s supply lines, but the direct hitting of vessels at the Volna terminal represents a fresh escalation in the conflict.