Oil Prices Inch Up as Market Considers Increased US Oversight of Venezuela

US Intensifies Oversight of Venezuelan Oil Exports

The United States has taken further steps to regulate Venezuela's oil industry, introducing indefinite controls over future crude sales and seizing two additional sanctioned tankers. These actions come as traders respond to the evolving situation.

Brent crude prices climbed above $60 per barrel after a recent 3% decline, while West Texas Intermediate hovered near $56. US Energy Secretary Chris Wright announced that the government would begin by releasing stored oil before moving on to sell Venezuelan crude. The Department of Energy confirmed that marketing efforts for the oil are already underway.

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Venezuela's state oil company, Petroleos de Venezuela SA (PDVSA), is currently in talks with US officials to establish a sales framework similar to its agreement with Chevron Corp., the only major American oil company still operating in Venezuela. According to sources cited by the Wall Street Journal, this arrangement would grant the US some oversight over PDVSA's operations.

US Seizes Russian-Flagged Tanker

American forces have intercepted a Russian-flagged oil tanker associated with Venezuela. The vessel, which was not transporting oil at the time, was pursued across the Atlantic and boarded in the northern part of the ocean.

President Donald Trump is advocating for US firms to help restore Venezuela’s struggling energy sector, which has suffered from years of underinvestment. He is scheduled to meet with energy industry leaders on Friday. As part of these efforts, the administration has begun to ease certain sanctions on Venezuela’s oil industry.

Citgo Petroleum Corp., a US refiner with indirect Venezuelan ownership, is considering resuming oil purchases for the first time since 2019, when sanctions halted its supply. Trafigura Group has also shown interest, and Chevron is negotiating with US authorities to extend its operating license in Venezuela.

On Tuesday, President Trump announced that Venezuela would transfer up to 50 million barrels of oil to the US, valued at over $2 billion. The oil will be sold, with proceeds benefiting both nations, and the revenue will be held in US Treasury accounts, according to an informed source.

Vandana Hari, founder of Vanda Insights, noted on Bloomberg Television that the redirection and redistribution of Venezuelan oil will likely be a significant trend in the coming months. She highlighted that China, a major buyer of discounted Venezuelan oil since the imposition of US sanctions, will be among the most impacted by these changes.

China has criticized the Trump administration’s reported demand for Venezuela to cut ties with US adversaries, calling it an act of intimidation, as reported by ABC News.

Market Impact and Ongoing Blockade

Global oil futures have started the year on a weaker note, following the largest annual drop since 2020. The potential for increased Venezuelan exports has already driven down Canadian crude prices and could further flood a market already dealing with abundant supply from OPEC+ and other producers.

Despite these developments, the US naval blockade of Venezuela remains in effect, maintaining pressure on the country's government. Recently, the US seized two more sanctioned oil tankers, including the Bella 1, which attempted to evade capture by sailing under a Russian flag but was ultimately intercepted south of Iceland.

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