Oil gains on fresh Venezuela sanctions, Iran concerns

Nurluqman Suratman


SINGAPORE (ICIS)–Oil prices rose on Thursday, reversing sharp losses in the previous session, after the US re-instated oil sanctions on Venezuela, and amid discussions by the EU about implementing new restrictions on Iran.

  • EU leaders mull fresh sanctions against Iran at Brussels summit
  • Market uncertainty tied to potential Israeli response to Iran
  • Poor economic data from China cap crude gains
Product ($/barrel) Latest (at 04:27 GMT) Previous Change
Brent June 87.57 87.29 0.28
WTI May 82.87 82.69 0.18

Both crude benchmarks fell overnight by nearly $3/barrel on demand concerns, with the US showing a higher-than-expected build in crude inventories.

The US on 17 April announced it would not renew a license expiring on Thursday which had previously eased sanctions on Venezuelan oil, opting to re-instate punitive measures due to President Nicolas Maduro’s failure to fulfill his election commitments.

The US’ six-month sanctions relief for Venezuela took effect on 18 October 2023.

Meanwhile, EU leaders are in Brussels, Belgium for a two-day summit (17-18 April) to discuss intensifying sanctions against Iran following Tehran’s missile and drone attack on Israel on 13 April, an incident that prompted global powers to attempt averting a broader Middle Eastern conflict.

“We have to adjust, to expand them [the sanctions] on Iran,” French President Emmanuel Macron said in Brussels ahead of the summit.

“We are in favor of sanctions that can also target all those who help manufacture drones and missiles that were used in the attacks last Saturday and Sunday [13-14 April].”

Israel has indicated its intention to retaliate, although it has not specified the means of response.

Iran and Venezuela, which are among the founding members of oil cartel OPEC, have substantial oil reserves, with Iran having the world’s fourth-largest proven oil reserves and Venezuela holding the largest.

Despite their influence on global oil prices, international sanctions have curtailed their production and export capabilities and market impact.

“The lack of direction in the market reflects the significant uncertainty about Israel’s possible response to Iran’s attack over the weekend,” Dutch banking and financial information services provider ING said in a note.

“However, for oil, sanctions are already in place, the issue is that they have not been strictly enforced for the last couple of years. And the big question is whether they will be enforced more rigorously now,” it said.

Keeping a lid on prices was poor March economic data from China, the world’s second-biggest economy.

Chinese exports in March fell by 7.5% year on year, the biggest fall since August last year.

March retail sales and industrial output also missed expectations, heightening concerns of muted demand from the world’s largest crude importer.

The US, on the other hand, showed improved in economic activity from late February to early April, with firms indicating expectations for steady inflation pressures, based on a Federal Reserve survey released on 17 April.

The Federal Reserve is currently not considering interest rate cuts in the near term due to a combination of resilient economic activity and persistently high inflation.

In March, US employers added more than 300,000 jobs – the most in nearly a year – and retail sales exceeded expectations after expanding by 0.7% month on month.

Focus article by Nurluqman Suratman

An oil tanker at the dock of the El Palito oil refinery at Puerto Cabello, Carabobo, Venezuela – 13 March 2022. (Juan Carlos Hernandez/ZUMA Press Wire/Shutterstock)


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