Crude Oil Soars 3% on Geopolitical Developments in Key Markets

Crude oil went up by over 3 per cent on Thursday as investors assessed developments in Venezuela and worried about supplies from Russia, Iraq and Iran.

Brent futures rose by $2.03 or 3.4 per cent to $61.99 per barrel, and the United States West Texas Intermediate (WTI) futures gained $1.77 or 3.2 per cent to trade at $57.76 per barrel.

The market is bracing for outcome of visits to Venezuela next week that will include representatives of the US and European oil companies, following the announcement of a $2 billion oil deal and the supply of goods to the South American country by the United States.

America seized two Venezuela-linked oil tankers in the Atlantic Ocean on Wednesday, with one sailing under Russia’s flag, as part of President Donald Trump’s aggressive push to dictate oil flows in the Americas.

After capturing Venezuelan President Nicolas Maduro in a military raid a few days ago, the US has been escalating its blockade of vessels that are under sanctions and traveling to and from the South American country, a member of the Organization of the Petroleum Exporting Countries (OPEC).

Meanwhile, the risk of a major supply shock related to Iran, another OPEC member, is climbing as protests swept the country, leading to a nationwide internet blackout.

President Trump’s earlier threat to come to the rescue of any peaceful protesters killed by the Iranian regime adds to concerns in oil markets that these protests could result in direct action by the US in Iran.

Iran’s President Masoud Pezeshkian warned domestic suppliers against hoarding or overpricing goods, as the country rolled out high-stakes subsidy reforms during nationwide protests against economic hardship.

Developments in Iraq, a member of OPEC, added to the broader geopolitical support for crude, as the cabinet approved plans to nationalize operations at the giant West Qurna 2 oilfield to avert potential disruptions linked to U.S. sanctions on Russian stakeholder Lukoil.

Iraq and Iran are among the biggest oil producers in OPEC behind Saudi Arabia.

A Russia-bound oil tanker was attacked by a drone in the Black Sea, prompting a request for Turkish Coast Guard assistance and a course diversion. While no party has claimed responsibility for the attack, it does highlight further instability in the region and a broader threat to oil flows.

Ukrainian President Volodymyr Zelenskiy said on Thursday the text of a bilateral security guarantee between Ukraine and the US was ready to be finalised with Mr Trump.