By: Economy Middle east

Oil prices held largely steady on Friday as Washington intensified economic measures targeting Venezuelan oil exports and conducted airstrikes against Islamic State fighters in northwest Nigeria at the request of authorities in Abuja.

As of 6:05 GMT, Brent crude futures were down 0.02 percent at $62.23 a barrel, while U.S. West Texas Intermediate (WTI) gained 3 cents, or 0.05 percent, to $58.38 a barrel.

Both contracts were set to rise nearly 3 percent this week, despite oversupply worries throughout the year keeping oil on track for large annual losses.

Heightened geopolitical risk limits losses

Oil prices stabilized after gains in recent sessions, driven by increased U.S. pressure on Venezuelan oil shipments. The White House has directed U.S. forces to impose a two-month “quarantine” on Venezuelan oil, a step designed to further restrict exports from the OPEC producer. The move also signals that Washington is prioritizing economic pressure over military action in its approach toward Caracas.

However, the latest developments have heightened concerns over possible supply disruptions, as Venezuela has been steadily ramping up shipments in recent months, particularly to Asia, thereby adding a risk premium to prices.

Both Venezuela and Nigeria are significant oil producers. Although Nigeria’s oilfields are largely concentrated in the south, the airstrikes heightened geopolitical risk concerns.

“Prices for the commodity have rallied earlier this week on concerns of supply risks from rising geopolitical tensions in Venezuela and the Ukraine-Russia conflict. From a macroeconomic perspective, despite a higher-than-expected rise in API Weekly Crude Oil stock in the U.S., a strong Q3 GDP print and geopolitical tensions overshadowed investor sentiment, keeping losses in crude oil limited,” said Vijay Valecha, chief investment officer, Century Financial.

Oil prices set for sharpest annual decline since 2020

Despite the emerging supply risks, oil prices are heading for their sharpest annual decline since 2020, as investors weigh U.S. economic growth prospects and assess the risk of supply disruptions, including those involving Venezuela.

Brent and WTI are set to fall by around 16 percent and 18 percent, respectively, this year, their steepest drops since the COVID-19 pandemic battered oil demand, as supplies are expected to outstrip demand in the year ahead.

The U.S. Energy Information Administration is scheduled to publish its official inventory figures on Monday, later than usual because of the Christmas holiday. The report is expected to offer insight into demand trends in the world’s largest oil-consuming nation. Focus is expected to shift to early January data releases and policy signals for clearer guidance on demand and supply as the new year begins.