By: Economy Middle east

Oil prices climbed more than 1 percent on Wednesday, driven by U.S. President Donald Trump’s directive for a naval blockade on sanctioned Venezuelan oil tankers, injecting fresh uncertainty into global energy markets. President Trump ordered a “total and complete” blockade of all U.S.-sanctioned oil tankers entering or leaving Venezuela, escalating pressure on Nicolás Maduro’s regime. Brent crude futures rose 1.56 percent to $59.84 per barrel, while U.S. West Texas Intermediate (WTI) crude gained around 1.65 percent to approximately $56.04 per barrel, rebounding from multi-year lows hit the prior day. The uptick reversed a sharp decline on December 16, when prices fell to $56.06 for WTI—the lowest since early 2021—amid optimism over a potential Russia-Ukraine peace deal that could ease sanctions and boost Russian supply. Traders cited the Venezuela blockade as a key supply disruption risk, countering oversupply fears from high OPEC+ output and weak demand signals.

December’s bearish trend

December has seen volatile oil prices, starting around $63.18 per barrel and dipping to $59.62 by December 16, reflecting monthly declines of over 6 percent for WTI and nearly 8 percent for Brent. Peaks hit $63.93 early in the month, but persistent oversupply concerns and geopolitical hopes for de-escalation in Europe drove lows below $60, a four-year trough. As of December 17, the blockade news provided a short-term bullish jolt, though analysts warn sustainability hinges on enforcement details and Venezuela’s response.

Targeting Maduro’s oil lifeline

Venezuela, despite heavy sanctions, exports about 800,000 barrels per day via shadowy tanker networks, often to China and India, funding Maduro’s government. Trump’s blockade could strand these shipments, tightening global supply by 1 to 2 percent if fully enforced, though evasion tactics like ship-to-ship transfers remain common. This contrasts with bullish U.S. production at record 13.5 million bpd, but demand worries from slowing Chinese growth and potential Russian oil re-entry cap upside. Markets now eye Maduro’s retaliation risks and U.S. Navy deployment scale.

Mixed post-jobs data reaction

Equity markets meandered post-U.S. jobs data, with oil’s jump standing out against broader commodity weakness. Australian shares dipped amid local business failures and rate hike fears, underscoring divergent regional pressures. For Middle Eastern producers like Saudi Arabia, higher prices offer fiscal relief amid budget strains, but prolonged lows threaten OPEC+ cohesion. Year-to-date, oil remains down nearly 20 percent, signaling a bearish 2025 outlook unless disruptions escalate.