Crude oil prices touched a three-week high this week, driven by the latest U.S. oil inventory data and expectations of tighter supply on Washington’s double-down on oil sanctions against Iran (as discussed in the previous blog) and Venezuela.
Brent crude was trading at $73.13 per barrel at the time of writing, with West Texas Intermediate at $69.12 per barrel, after the American Petroleum Institute reported on Tuesday that oil inventories in the county had fallen by 4.6 million barrels in the week to March 21.
Earlier in the week, President Donald Trump threatened any country importing Venezuelan crude would be subjected to a 25% tariff on all trades with the United States, with the new regime set to begin next month. As a result, loadings of crude at Venezuelan ports immediately slowed, according to a Reuters report, suggesting a tighter supply situation on the horizon, especially in heavy crude.
Citing TankerTrackers.com data, Reuters said there were three super tankers loading at Venezuela’s largest oil port, Jose, but there was an empty berth there as well. No loadings were detected at the port of Bajo Grande. At the port of Jose, there were also tankers waiting to load, although two vessels that had completed loadings were sitting in Venezuelan waters, TankerTrackers.com told Reuters.
In contrast, there is some counter pressure coming from wider geopolitics, where the U.S., Russia, and the Ukraine appear to have struck a deal for a suspension of hostilities over the Black Sea and on energy infrastructure, although reports did not say when the suspension would enter into effect (if at all).
As part of the deals, negotiated separately with Russia and the Ukraine, the U.S. has committed to lobby for a relaxation of sanctions on Russia such as allowing Russia banks to access the Brussels based SWIFT payment platform. However, as the U.S does not control SWIFT and with the EU unlikely to make any concessions for Russia, its highly likely any meaningful attempt of a ceasefire or any sort of de-escalation will materialise any time soon.
Next week’s fuel card prices will increase in the region of 1.4 pence per litre for the first week of April, the first rise in several weeks as the markets navigate a volatile geo-political landscape.
