Oil prices extended gains for a fifth straight session on Tuesday, driven by concerns about possible supply constraints following the imposition of new tariffs by the United States on countries importing Venezuelan oil. However, reports that OPEC+ intends to press ahead with increasing production in May have tempered this upward momentum.
Brent crude futures rose 46 cents, or 0.6%, to trade at $73.46 a barrel by 10:23 GMT, while U.S. West Texas Intermediate crude rose 41 cents, or 0.6%, to $69.52 a barrel. The two benchmarks had already gained more than 1% in the previous session.
The price hike came after US President Donald Trump announced a 25% tariff on countries that buy Venezuelan oil. Venezuela, whose economy relies heavily on crude oil exports, China — already facing multiple U.S. tariffs — is its biggest buyer.
Analysts at Panmore Liberam noted that “oil prices rose thanks to the latest U.S. tariff moves, although gains were capped by reports of OPEC+ moving to increase production in May.””.
In a related development, the US administration on Monday extended the deadline for Chevron to reduce its operations in Venezuela until May 27. According to ANZ analysts, withdrawing Chevron’s license to operate in the country could lead to a reduction in production by about 200,000 barrels per day.
Meanwhile, sources told Reuters that the OPEC+ alliance – which includes the Organization of the Petroleum Exporting Countries (OPEC) and allies such as Russia – remains committed to its plan to increase oil production in May. The alliance is also expected to impose production cuts on some members to offset previous surplus production.
Last week, Washington imposed additional sanctions targeting Iran’s oil exports, adding to market uncertainty.
Oil prices rise amid fears of supply cuts
Oil prices rose on Tuesday for the fifth consecutive day, amid fears of shrinking global supply after the United States announced tariffs on countries buying Venezuelan oil.
Brent crude futures rose 27 cents to $73.27 a barrel. U.S. West Texas Intermediate crude rose 26 cents to $69.37.
Both benchmarks rose more than 1% in the previous session, after U.S. President Donald Trump announced 25% tariffs on countries importing oil and gas from Venezuela. Oil is the main source for Venezuela, and China, already subject to U.S. tariffs, is its biggest buyer.
ING analysts wrote in a note on Tuesday that the move could mean a significant contraction in the global oil balance.
Oil, along with riskier assets, has also benefited from hints that the Trump administration may adopt a more targeted approach with-for-tat tariffs set to be implemented by the U.S. on April 2, they added.
Tsuyoshi Ueno, chief economist at NLI Research Institute, said: “Investors fear that Trump’s various tariffs will slow the economy and shrink oil demand, but the prospect of tightening U.S. sanctions on Venezuelan and Iranian oil, restricting supply, coupled with rapid shifts in his policies, makes it difficult to take big positions”.
“We expect WTI to remain at around $70 for the rest of the year, with potential seasonal gains as the US and other countries enter the driving season”.
Last week, the United States imposed new sanctions aimed at affecting Iran’s oil exports.
The Trump administration on Monday also extended the deadline to May 27 for U.S. oil producer Chevron to scale back its operations in Venezuela. Revoking Chevron’s license to operate in the country could cut production by about 200,000 barrels per day, according to ANZ analysts.
Oil prices rise after imposition of tariffs on Venezuelan oil
Crude oil prices rose after US President Donald Trump announced a 25% tariff on Venezuelan oil buyers. Ninex West Texas Intermediate (WTI) crude futures are up 11%, while Intercontinental Brent crude futures are up 6.7% since their March 5 lows.
US President Donald Trump posted on Truth Social that he will sign an executive order imposing 25% tariffs on countries that buy Venezuelan oil and gas, effective April 2. He called this date “Liberation Day in America,” when the tariffs he had long threatened to impose will take effect. Many view the move as a political maneuver intended to pressure Venezuelan President Nicolas Maduro and China, Venezuela’s largest oil importer.
Oil prices rose following the announcement, with West Texas Intermediate crude futures on the New York Mercantile Exchange (NYMEX) up 1.22% to $69.11 a barrel, while Brent crude futures on the Intercontinental Exchange (ICE) rose 1.16% to $73 a barrel on Monday. Both benchmarks hit their highest since March 3, recording gains of 11% and 6.7%, respectively, despite a slight decline during the Asian session on Tuesday.
Trump referred to the new oil tariffs as “secondary tariffs” aimed at tackling illegal immigration from Venezuela. “Venezuela has deliberately and deceived tens of thousands of top criminals and others to the United States, undercover, many of them murderers and people of a very violent nature,” he claimed.
“Any country that buys oil and/or gas from Venezuela will be forced to pay 25 percent tariffs to the United States on any trade it conducts with our country.” According to Reuters, China is the largest buyer of Venezuelan oil, followed by the United States, India, Spain, Italy and Cuba.
