Oil rises as market weighs Venezuela supply risks

Brent and WTI prices are on track to drop about 16% and 18%, respectively, this year

Oil prices climbed on Friday (Dec 26) after the US ordered increased economic pressure on Venezuelan oil shipments and carried out airstrikes against Islamic State militants in northwest Nigeria at the request of Nigeria’s government.

Brent crude futures rose 24 US cents, or 0.4 per cent, to US$62.48 per barrel by 9.14 am. US West Texas Intermediate (WTI) crude was up 23 US cents, also 0.4 per cent, at US$58.58.

Both Venezuela and Nigeria are major oil producers. While Nigeria’s oilfields are mainly located in the south of the country, the airstrikes added to geopolitical risks.

The White House has ordered US military forces to focus on a “quarantine” of Venezuelan oil for at least the next two months, indicating Washington is currently more interested in using economic rather than military means to pressure Caracas.

Oil prices, though, are on course for their steepest annual decline since 2020 as investors weighed US economic growth and assessed the risk of supply disruptions including in Venezuela.

Brent and WTI prices are on track to drop about 16 and 18 per cent, respectively, this year, their steepest declines since the Covid-19 pandemic hit oil demand, as supply is expected to outpace demand next year.

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Oil shipments from Kazakhstan via the Caspian Pipeline are set to drop by a third in December to the lowest since October 2024 after a Ukrainian drone attack damaged facilities at the main CPC export terminal, two market sources said on Wednesday.

The US Energy Information Administration is due to release official inventory data on Monday, later than usual due to the Christmas holiday. The data should give a picture of demand in the world’s biggest oil consumer. REUTERS

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