Oil fell as the US eased crude sanctions against Venezuela, denting some of the price gains spurred by the devastating conflict in the Middle East.
(Bloomberg) — Oil fell as the US eased crude sanctions against Venezuela, denting some of the price gains spurred by the devastating conflict in the Middle East.
Brent dropped to near $90 a barrel after touching a two-week high on Wednesday. The US suspended some sanctions on Venezuelan oil and other commodities in response to the signing of an electoral roadmap agreement between the government of President Nicolas Maduro and the opposition.
Analysts estimate that the US shift may enable the country to pump about 200,000 more barrels a day, a roughly 25% jump in output that will add barrels to a relatively tight market.
US President Joe Biden plans an Oval Office address on the Middle East crisis on Thursday amid a drive to prevent the conflict from escalating. It follows a brief midweek visit to Israel to show his solidarity after the Hamas attack.
Oil has been volatile since the Oct. 7 attack on Israel by Hamas, designated a terrorist organization by the US and European Union. There are concerns that an expected ground offensive by Israel into Gaza could prompt a more aggressive response from Iranian-backed Hezbollah in southern Lebanon and, potentially, Tehran itself. Concerns that the conflict could affect fuel flows have countered the impact from higher interest rates.
“The sting was taken out of the rally by the US easing Venezuelan sanctions,” said Tamas Varga an analyst at brokerage PVM. “The ongoing hostility in the Middle East has raised the price floor to around $85 a barrel basis Brent.”
Iran has appealed for an oil boycott against Israel as it ramps up pressure against Hamas in Gaza. Citigroup Inc. said Israel’s main suppliers, including Kazakhstan and Azerbaijan, were unlikely to follow such a call.
US data, meanwhile, pointed to very tight physical markets. Holdings of crude at Cushing, Oklahoma — the delivery point for WTI — dropped by more than 700,000 barrels last week to hit the lowest level since 2014.
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