Oil prices climbed more than 1% on Wednesday after U.S. President Donald Trump ordered a “total and complete” blockade of sanctioned oil tankers entering and leaving Venezuela. The move injected fresh geopolitical uncertainty into energy markets already grappling with fragile global demand.
Brent crude futures rose 87 cents, or 1.5%, to $59.79 a barrel by 07:30 GMT. U.S. West Texas Intermediate crude also gained 85 cents, or 1.5%, to trade at $56.12 a barrel.
Venezuela blockade fuels short-term oil rebound
Oil prices had settled near five-year lows in the previous session after progress in Russia-Ukraine peace talks raised expectations that Western sanctions on Moscow could eventually be eased, potentially adding supply to a market already facing weak demand conditions.
Trump’s order to block sanctioned Venezuelan oil tankers reversed some of that pressure, lifting prices amid renewed geopolitical risk. The U.S. president also said he now considers Venezuela’s ruling authorities to be a foreign terrorist organization.
Traders in Asia noted that part of Wednesday’s price rebound was also driven by technical buying, after crude prices dipped below the $60-per-barrel level earlier in the week.
One trader said the market reaction was largely sentiment-driven, adding that Venezuelan export volumes represent a relatively small share of global supply. With attention still focused on Russia-Ukraine negotiations, downside risks for oil prices remain.
Another trader said the latest price rise may be short-lived, describing it as a potential opportunity for investors to build short positions.
Uncertainty over enforcement and supply impact
Trump’s announcement followed last week’s seizure of a sanctioned oil tanker off Venezuela’s coast. However, it remains unclear how many vessels would be affected by the blockade or how the United States plans to enforce it.
In recent months, U.S. warships have been deployed to the region, raising speculation that the Coast Guard could be used to interdict sanctioned tankers, similar to recent actions.
While many ships lifting Venezuelan crude are under sanctions, others transporting oil from Venezuela, Iran, and Russia have not been targeted. Tankers chartered by Chevron are also continuing to ship Venezuelan crude to the United States under an existing authorization from Washington.
Analysts see limited upside from Venezuela disruption
Venezuelan oil production accounts for about 1% of global output, according to Muyu Xu, senior oil analyst at Kpler. Supplies are concentrated among a small group of buyers, primarily Chinese independent refiners, the United States, and Cuba.
Xu said ample supply in the sanctioned oil market is likely to cap any significant upside in Venezuelan crude prices in China, even if shipments are disrupted. China remains the largest buyer of Venezuelan oil, accounting for roughly 4% of its crude imports.
Emril Jamil, senior oil analyst at LSEG, said a sharp price rally is unlikely in the short term unless retaliatory actions disrupt oil and gas systems across the wider Americas. Expectations of a global supply glut continue to dominate market sentiment.
Over the longer term, however, analysts noted that prolonged supply disruptions could offer support to heavier crude grades.
