The prices of crude oil reacted to the threat by United States President Donald Trump to impose sanctions on any country buying Venezuela’s oil, sparking some bullishness in oil markets this week.
The prices of crude surged on Tuesday following the announcement as traders speculated a possible shrink in crude supply.
Trump has been concurrently the biggest oil bear and oil bull out there, and this week has driven bullish sentiment, according to oilprice.com.
US sanctions on Venezuela, effectively punishing any country that is buying the country’s barrels except for refiners in the United States, coincided with a one-month extension of Chevron’s mandate to wind down operations in the country.
With market participants wary of less heavy oil in the market, ICE Brent futures jumped above $73 per barrel again.
The White House introduced a 25 per cent tariff for any country that buys oil or gas from Venezuela in case of any trade made with the United States, impacting China as the Asian nation accounted for 55 per cent of Venezuela’s 500,000 barrels per day exports lately.
As of Wednesday morning, Brent was $73.27, while WTI rose to $69.26.
The surge in crude prices came days after the commodity experienced a decline in price.
Trump has consistently advocated that the Organisation of the Petroleum Exporting Countries bring down crude prices, saying it contributed to the war between Russia and Ukraine.
However, its latest decision might work contrary to its plan to cut oil prices.
Reuters reports that Trump’s new policy relieves some pressure on Chevron to quickly exit Venezuela after the US Treasury Department on March 4 gave it 30 days to wind down operations.
Trump had issued the initial wind-down after he accused President Nicolas Maduro of not making progress on electoral reforms and migrant returns.
The Treasury Department said on Monday it would wait until May 27 before terminating a licence that the US has granted to Chevron since 2022 to operate in sanctioned Venezuela and export its oil to the United States.
Chevron’s extension came hours after Trump announced the new tariff, saying Venezuela has sent “tens of thousands” of people to the United States who have a “very violent nature.”
The two moves temporarily focus Trump’s pressure on buyers of Venezuelan crude oil other than the United States, such as China, though it is uncertain how his administration will enforce the tariff, Reuters reports.