Oil prices surged on Wednesday following a dramatic escalation in US sanctions, as President Donald Trump announced “a total and complete” blockade on all sanctioned oil tankers entering and leaving Venezuela, intensifying geopolitical concerns amid already cautious global demand.
By 0135 GMT, Brent crude futures rose 57 cents, or 0.9%, reaching $59.50 a barrel, while US West Texas Intermediate (WTI) crude climbed 59 cents, or 1%, to $55.86 a barrel.
The rally came after oil prices had dipped to near five-year lows the previous day, pressured by optimism over progress in Russia-Ukraine peace negotiations.
A potential deal could ease Western sanctions on Moscow, boosting supply in a market already facing oversupply.
Earlier on Tuesday, Trump issued the blockade order targeting sanctioned Venezuelan tankers and declared that he now considers the country’s rulers a foreign terrorist organisation.
The measure could disrupt roughly 0.4–0.5 million barrels per day of supply, potentially pushing prices up by $1–2 per barrel, according to a US oil trader.
“In regard to pricing impacts, we should see the prompt physical premiums reacting more than flat price, especially natural Merey replacements in the Gulf Coast like Canadian and Colombian Castilla blends, though the total loss of supply would be less than 200,000 barrels per day for the Chevron equity cargoes,” Matias Togni, analyst at oil market insights firm Next Barrel, told Reuters.
Another analyst noted that while the oil market is currently well supplied, prolonged enforcement of the blockade could drive crude prices even higher.
Details remain unclear on how the US intends to implement the blockade or whether it will deploy the Coast Guard, similar to last week’s operations. In recent months, Washington has stationed warships in the region.
Trump’s latest action follows the US seizure of a sanctioned oil tanker off Venezuela’s coast last week, escalating pressure on President Nicolas Maduro’s government, which Trump accuses of permitting drug shipments into the US.
Since the tanker seizure, Venezuela’s crude exports have fallen sharply. Many tankers transporting Venezuelan oil are under sanctions, though others, carrying crude from Venezuela, Iran, and Russia, remain unsanctioned.
Chevron-chartered tankers are still shipping Venezuelan crude to the US under prior authorisation from Washington.
