Oil settles higher on risk of disruptions to Venezuela, Russia supply

Oil prices settled higher on Monday after the US Coast Guard tried to intercept an oil tanker in international waters near Venezuela a day earlier, and Ukraine damaged two vessels and piers in Russia, raising the risk of oil supply disruptions.

Brent crude futures gained US$1.60, or 2.7 per cent, to settle at US$62.07 a barrel, while US West Texas Intermediate crude futures rose US$1.49, or 2.6 per cent, to settle at US$58.01 a barrel.

The US Coast Guard tried to intercept an oil tanker on Sunday that US officials said is part of Venezuela’s illegal sanctions evasion, the third such operation this month. The pursuit followed US President Donald Trump’s announcement last week of a blockade of oil tankers under sanctions entering and leaving Venezuela.

Market participants see a risk of disruption to Venezuelan oil exports because of the US embargo, having previously downplayed the risk, said UBS analyst Giovanni Staunovo.

Venezuelan crude accounts for 1 per cent of global supply, and most of it is bought by China. Beijing on Monday said the US seizure of another country’s ships is a serious violation of international law, after the US on Saturday intercepted a China-bound oil tanker off the Venezuelan coast.

Black Sea key to Russian energy exports

Oil prices were also rising because of reports of Ukrainian drone attacks on Russian ships at a Black Sea port, oil trading advisory firm Ritterbusch and Associates said in a note.

A Ukrainian drone attack damaged two vessels, two piers and sparked a fire in a village on the Black Sea coast in Russia’s Krasnodar region, regional authorities said on Monday. The Black Sea region is vital for Russia’s energy exports.

“We expect further consolidation this week amid reduced holiday volumes and a continued standoff between deteriorating oil fundamentals and a need to maintain some geopolitical risk premium related to Ukraine/Russia and Venezuela,” Ritterbusch and Associates said.

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US special envoy Steve Witkoff said on Sunday that talks between US, European, and Ukrainian officials in Florida over the past three days to end Russia’s war in Ukraine had focused on aligning positions. Those meetings and separate talks with Russian negotiators had been productive, he said.

However, the top foreign policy aide of Russian President Vladimir Putin said changes made by the Europeans and Ukraine to US proposals had not improved prospects for peace. REUTERS

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