BEIJING: Oil prices climbed on Thursday amid reports that the United States may impose new sanctions on Russian oil if Moscow does not agree to a peace deal with Ukraine. Market participants also weighed the potential supply risks from a blockade of Venezuelan oil tankers.
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US West Texas Intermediate (WTI) crude was up 44 cents, or 0.79%, at $56.38 per barrel at 0256 GMT, after initially rising more than a dollar. Brent crude increased 42 cents, or 0.7%, to $60.10 per barrel.
Bloomberg reported on Wednesday that the US is preparing another round of sanctions targeting Russia’s energy sector if talks with Ukraine fail. A White House official told Reuters that President Donald Trump has not made any final decisions on additional measures.
Analysts at ING said further sanctions on Russian oil could pose an even greater supply risk than the US blockade of Venezuelan tankers announced earlier. They noted that given current market conditions and Brent trading around $60 per barrel, Washington could act more aggressively with sanctions.
The US reportedly plans to target Russia’s “shadow fleet” of vessels transporting sanctioned oil and the traders facilitating these shipments. Potential measures could be announced as early as this week. Meanwhile, Russian President Vladimir Putin warned that he may seize more Ukrainian territory by force if Europe does not engage with US settlement proposals.
The Venezuelan tanker blockade puts about 600,000 barrels per day (bpd) of Venezuelan exports at risk, mostly bound for China. Around 160,000 bpd of exports to the US are expected to continue under previous authorisations. PDVSA has resumed some shipments after suspending operations due to a cyberattack, though most exports remain on hold.
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Venezuelan crude accounts for roughly 1% of global supply. Market sources say weak demand and a surplus of crude in floating storage in Asia have limited its immediate impact on global oil markets.