By: Economy Middle east

Oil prices climbed on Thursday, driven by reports of new U.S. sanctions targeting Russia’s energy sector and President Donald Trump’s order for a blockade of sanctioned Venezuelan oil tankers. Brent crude futures rose 0.79 percent to $60.15 per barrel, while West Texas Intermediate (WTI) gained 0.86 percent to $56.29. This rebound came after weeks of declines, with prices hovering near multi-year lows amid global supply gluts and weak demand signals from China.

Geopolitical tensions fuel rally

President Trump’s announcement of a “total and complete blockade” on sanctioned Venezuelan tankers marked a sharp escalation in U.S. pressure on Nicolás Maduro’s regime. Trump labeled the government a “foreign terrorist organization” tied to drug trafficking and asset theft, vowing to expand naval operations until Venezuela returns disputed oil and land resources. The move followed a U.S. seizure of a Venezuelan-linked tanker earlier in December, disrupting exports of around 590,000 barrels per day, mostly to China.

Compounding the pressure, reports emerged of impending U.S. sanctions on Russia’s “shadow fleet” of oil tankers and traders as leverage in Ukraine peace talks. Treasury officials signaled actions against opaque networks facilitating Russian exports if Vladimir Putin rejects a ceasefire, building on earlier penalties against producers like Rosneft and Lukoil. These threats heightened supply disruption fears, propelling the intraday spike despite broader bearish fundamentals.

Sentiment drives prices

Crude benchmarks snapped a downward trend, with WTI up over 2.4 percent in early trading before paring some gains. European oil majors like BP and Shell led equity rallies, rising 2.7 percent and 2.0 percent respectively in pre-market, while U.S. firms such as ExxonMobil gained modestly at 0.98 percent. Traders noted the rally as sentiment-driven, with Venezuela’s output—already at a seven-month low—representing a minor slice of global supply at under 1 million barrels daily.

Earlier in December, prices had fluctuated between $59.03 and $63.93 per barrel, reflecting OPEC+ output pauses and ample non-OPEC supply. As of December 17, crude stood at $56.23, down 19.69 percent year-over-year, before Thursday’s jump reversed recent losses fueled by progress in Russia-Ukraine negotiations and China’s economic slowdown. Analysts cautioned that without sustained enforcement, the upside remains capped by a projected surplus.

Venezuela faces export squeeze

The blockade threatens to halt PDVSA’s shadow fleet operations, with over 11 million barrels stranded amid “war clauses” inflating shipping costs. Chinese buyers, handling 80 percent of Venezuela’s crude, now demand $21-per-barrel discounts off Brent—up from $14—while Russian naphtha imports for blending have stalled, as seen with the tanker Boltaris turning back. A recent cyberattack forced PDVSA to manual logging, exacerbating delays, though Chevron’s licensed shipments to the U.S. proceeded unaffected.

Venezuela severed gas ties with Trinidad and Tobago over alleged U.S. support, scrapping the Campo Dragón project and accusing the nation of hosting American military flights. Mexican President Claudia Sheinbaum condemned the actions as interventionist, urging UN mediation to avert bloodshed. Prediction markets reflect bets on Maduro’s 2026 ouster, with 41 percent odds by March 31 amid surging $26.5 million in volume.

Russia sanctions escalate pressure

U.S. threats target Russia’s shadow fleet of 183 vessels and traders evading prior caps, potentially forcing deeper discounts on Urals crude. Earlier Treasury actions hit Gazprom Neft and Surgutneftegas, banning U.S. petroleum services from February 2025 and blocking subsidiaries. Ukraine’s strikes on refineries like Slavyansk-on-Kuban added supply risks, with flames visible after drone attacks disrupted 5.2 million tonnes annual capacity.

The EU Parliament’s vote for a Russian gas phase-out by 2027—500-120—signals long-term decoupling, down from 45 percent pre-invasion reliance. Oil sanctions could follow in 2026, pressuring Moscow’s war funding despite peace talk progress on Donbas and frozen assets.