Oil Prices Rise Following Revocation of Chevron’s Venezuela License

Oil prices increased as President Trump revoked Chevron’s Venezuela license, impacting crude exports. Brent crude rose to $72.77, and WTI increased to $68.80. The market reacted to ongoing geopolitical tensions and lower U.S. fuel inventories, suggesting stabilization ahead. Goldman Sachs anticipates a price range of $70 to $85 for Brent, conducive to U.S. supply growth.

Oil prices experienced a rise for the first time in three days following U.S. President Donald Trump’s decision to revoke Chevron’s license to operate in Venezuela. Brent crude oil futures increased by 24 cents, or 0.33%, reaching $72.77 per barrel, while U.S. West Texas Intermediate crude oil futures rose by 18 cents, or 0.26%, to $68.80 per barrel. The increase comes after a decline in prices attributed to an unexpected rise in U.S. fuel inventories and ongoing peace negotiations between Russia and Ukraine, leading to a nearly 5% loss in both benchmarks this month.

President Trump announced the cancellation of a license initially granted to Chevron by former President Joe Biden, which allowed the company to operate in Venezuela. Chevron is responsible for exporting approximately 240,000 barrels of crude oil daily from its operations in Venezuela, accounting for over a quarter of the nation’s entire oil output. With the license revoked, Chevron will cease to export Venezuelan crude oil.

Hiroyuki Kikukawa, president of NS Trading, indicated that the news regarding Venezuela is causing a market correction after recent sell-offs prompted by peace talks between Russia and Ukraine. Additionally, potential purchases from the U.S. Strategic Petroleum Reserve (SPR) have bolstered market conditions, as WTI crude prices approached their lowest levels in over two months. Last week, President Trump stated that his administration aims to replenish the SPR and criticized the current administration’s use of the reserve to lower gasoline prices.

Market participants are closely monitoring developments in the Trump-led Russian-Ukrainian peace talks. President Trump mentioned that Ukrainian President Volodymyr Zelenskiy would visit Washington to sign an agreement related to rare earth minerals, stressing that the deal’s success depends on negotiations as well as ongoing U.S. support.

According to the Energy Information Administration, U.S. crude oil stockpiles unexpectedly decreased last week, accompanied by a rise in refining activity. However, inventory levels of gasoline and distillates saw surprising increases. Kikukawa remarked, “Since this is a seasonal off-peak period, with demand shifting from kerosene to gasoline, the sell-off driven by rising product inventories has likely run its course.”

Separately, Goldman Sachs provided insight, stating that the U.S. administration’s dual objectives of commodity dominance and affordability contribute to a projected price range of $70 to $85 for Brent crude, a scenario which supports robust growth in U.S. oil supply.

In summary, oil prices have risen after President Trump’s cancellation of Chevron’s license to export Venezuelan crude, which is significant given the country’s reliance on Chevron’s operations. This decision has awakened market concerns about supply amidst ongoing geopolitical tensions and reduced U.S. fuel inventories. Experts suggest that the current off-peak demand season may stabilize prices moving forward, while Goldman Sachs highlights the favorable range for future U.S. oil production growth.

Original Source: theedgemalaysia.com