The oil market was mixed on Tuesday as a truce between Russia and Ukraine offset concerns about tighter global supply due to threatened US tariffs on countries buying Venezuelan production.
Brent crude futures closed higher by 2 cents or 0.03 per cent at $73.02 a barrel and the US West Texas Intermediate (WTI) crude fell by 11 cents or 0.16 per cent to $69 per barrel.
The US reached deals with Ukraine and Russia to pause attacks at sea and against energy targets, with Washington agreeing to push to lift some sanctions against Russia.
The agreements are the first formal commitments by the two warring sides since President Donald Trump’s inauguration.
President Trump is pushing for an end to the war in Ukraine and a rapid rapprochement with Russia that has alarmed Ukraine and European countries.
The US agreement will help seek the lifting of international sanctions on Russian agriculture and fertiliser exports, a Russian demand that has been in the offing since.
Meanwhile, both sides said they would rely on the US to enforce the deals, while expressing scepticism that the other side would abide by them.
Market analysts confirmed that a ceasefire between Russia and Ukraine might open the door for the reduction of sanctions on Russian oil.
However, President Trump’s threat of tariffs against countries importing oil and gas from Venezuela has raised supply concerns.
The tariffs have been considered an indirect sanction designed to hurt China’s independent refineries , which are the largest buyers of Venezuelan oil.
The Trump administration has extended a deadline to May 27 for US producer Chevron to wind down operations in Venezuela.
The withdrawal of Chevron’s licence to operate could reduce production in the country by about 200,000 barrels per day.
This is after the US issued new sanctions intended to hit Iranian oil exports last week.
In addition, the Organisation of the Petroleum Exporting Countries and allies (OPEC+) will likely stick to its plan to raise oil output for a second consecutive month in May.
The American Petroleum Institute (API) estimated that crude oil inventories in the United States fell by 4.6 million barrels for the week ending March 21. Official information will come from the US Energy Information Administration (EIA) later on Wednesday.