Oil prices rose on February 27 after President Trump canceled Chevron’s license in Venezuela, impacting supply. Brent crude increased by 0.33% to $72.77 per barrel, while WTI rose by 0.26% to $68.80. This decision is viewed against a backdrop of fluctuating US fuel inventories and ongoing geopolitical tensions.
On February 27, oil prices increased for the first time in three days, amid concerns about supply following United States President Donald Trump’s decision to revoke Chevron’s license to operate in Venezuela. Brent crude futures rose by 24 cents, or 0.33%, reaching $72.77 per barrel, while US West Texas Intermediate crude futures climbed 18 cents, or 0.26%, to $68.80 per barrel.
The previous day saw oil contracts settle at their lowest levels since December 10 due to an unexpected rise in US fuel inventories, indicating diminishing demand alongside optimism for a peace agreement between Russia and Ukraine. Thus far in February, both oil benchmarks have declined by approximately 5%.
President Trump announced this license reversal on Wednesday, impacting Chevron’s capacity to export Venezuelan crude, which accounts for over a quarter of the country’s total oil production, roughly 240,000 barrels per day.
Hiroyuki Kikukawa, president of NS Trading, a subsidiary of Nissan Securities, commented, “The Venezuela news triggered unwinding after the recent sell-off amid Russian-Ukraine ceasefire talks.” He further noted that there may be potential buying from the US Strategic Petroleum Reserve due to low West Texas Intermediate prices.
Moreover, last week, Trump indicated that his administration would expedite filling the Strategic Petroleum Reserve, while also criticizing President Biden for previously utilizing the reserve to lower gasoline prices. Market participants are closely monitoring Trump’s efforts related to peace talks between Russia and Ukraine.
The Energy Information Administration reported an unexpected decline in US crude oil stockpiles alongside an increase in refining activity, although gasoline and distillate inventories saw gains. Kikukawa stated, “Since this is a seasonal off-peak period, with demand shifting from kerosene to gasoline, the sell-off driven by rising product inventories has likely run its course.”
In another development, Goldman Sachs noted that the dual objectives of the US administration pertaining to commodity dominance and affordability reaffirm the bank’s forecasted $70-$85 range for Brent crude, a range anticipated to encourage robust growth in US supply.
In conclusion, the reversal of Chevron’s operating license in Venezuela has led to a significant rise in oil prices amid supply concerns. Market reactions also reflect broader geopolitical dynamics, particularly regarding US-Russian relations and inventories. As the situation unfolds, analysts remain vigilant regarding future market trends, particularly as the US administration pursues its objectives concerning crude oil supply and pricing.
Original Source: theedgemalaysia.com
