Oil prices rose on Wednesday morning as supply concerns increased after US President Donald Trump ordered a “complete and total” blockade of sanctioned oil tankers moving in and out of Venezuela.
Brent, the benchmark for two thirds of the world's oil, was up 1.37 per cent at 11.02am UAE time to $59.73 a barrel, while West Texas Intermediate, the gauge that tracks US crude, was trading 1.45 per cent higher at $56.07 a barrel.
This came after WTI fell to its lowest levels since early 2021 this week on the prospect of more Russian oil entering global markets as peace talks to end the Ukraine war gain momentum.
Rising supply risk from Venezuela is offering only “marginal support” to crude, because of the country’s relatively small export volumes, said Vandana Hari, chief executive of Singapore-based Vanda Insights.
However, upbeat US rhetoric over a Ukraine peace deal, and expectations of a milder-than-normal Northern Hemisphere winter are putting downwards pressure on oil prices on oversupply concerns, she added.
Mr Trump on Tuesday ordered a blockade of all sanctioned oil tankers entering and leaving Venezuela, putting oil flowing out of South American country at risk.
This came after US troops seized a “very large” oil tanker off the Venezuela coast last week as the Trump administration continues to put pressure on Venezuelan President Nicolas Maduro and his government.
The oil tanker, which had been under US sanctions for years, had been used to smuggle oil from Venezuela and Iran, according to US officials.
Venezuela produces 1.1 million barrels a day, with the oil mainly flowing to China and India, according to Rystad Energy analysis.
Although the volume is small in terms of global trade flows, representing about 1 per cent, but the quality is unique as more than 67 per cent of the output is heavy, it added.
“Benchmark crude oil prices could be impacted significantly by escalating military tensions between the US and Venezuela, with the Trump administration tightening pressure on Nicolas Maduro’s regime and signalling the possibility of a US incursion,” Rystad said.
But, despite Venezuela tensions, “oil markets remain weighed down by structural oversupply concerns”, Soojin Kim, a research analyst at MUFG Bank, said.
This was due to output increase from Opec+, tepid demand concerns and a potential Ukraine peace deal that could ease curbs on Russia crude “leaving prices on track for an annual decline”, she added.
Oil prices have been volatile this year with the Russia-Ukraine war and peace talks to end it. Mr Trump's tariffs and the decision by Opec+ to unwind production cuts has also affected prices.
Traders expect more oil to enter global markets next year as the producers' group boosts output amid lower demand.
Last month, Opec+ agreed to another output increase of 137,000 bpd for December. However, it paused production rises for the first quarter of next year.
WHAT IS A BLACK HOLE?
1. Black holes are objects whose gravity is so strong not even light can escape their pull
2. They can be created when massive stars collapse under their own weight
3. Large black holes can also be formed when smaller ones collide and merge
4. The biggest black holes lurk at the centre of many galaxies, including our own
5. Astronomers believe that when the universe was very young, black holes affected how galaxies formed
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Avatar: Fire and Ash
Director: James Cameron
Starring: Sam Worthington, Sigourney Weaver, Zoe Saldana
Rating: 4.5/5
How to help
Donate towards food and a flight by transferring money to this registered charity's account.
Account name: Dar Al Ber Society
Account Number: 11 530 734
IBAN: AE 9805 000 000 000 11 530 734
Bank Name: Abu Dhabi Islamic Bank
To ensure that your contribution reaches these people, please send the copy of deposit/transfer receipt to: juhi.khan@daralber.ae
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Know your camel milk:
Flavour: Similar to goat’s milk, although less pungent. Vaguely sweet with a subtle, salty aftertaste.
Texture: Smooth and creamy, with a slightly thinner consistency than cow’s milk.
Use it: In your morning coffee, to add flavour to homemade ice cream and milk-heavy desserts, smoothies, spiced camel-milk hot chocolate.
Goes well with: chocolate and caramel, saffron, cardamom and cloves. Also works well with honey and dates.
What is blockchain?
Blockchain is a form of distributed ledger technology, a digital system in which data is recorded across multiple places at the same time. Unlike traditional databases, DLTs have no central administrator or centralised data storage. They are transparent because the data is visible and, because they are automatically replicated and impossible to be tampered with, they are secure.
The main difference between blockchain and other forms of DLT is the way data is stored as ‘blocks’ – new transactions are added to the existing ‘chain’ of past transactions, hence the name ‘blockchain’. It is impossible to delete or modify information on the chain due to the replication of blocks across various locations.
Blockchain is mostly associated with cryptocurrency Bitcoin. Due to the inability to tamper with transactions, advocates say this makes the currency more secure and safer than traditional systems. It is maintained by a network of people referred to as ‘miners’, who receive rewards for solving complex mathematical equations that enable transactions to go through.
However, one of the major problems that has come to light has been the presence of illicit material buried in the Bitcoin blockchain, linking it to the dark web.
Other blockchain platforms can offer things like smart contracts, which are automatically implemented when specific conditions from all interested parties are reached, cutting the time involved and the risk of mistakes. Another use could be storing medical records, as patients can be confident their information cannot be changed. The technology can also be used in supply chains, voting and has the potential to used for storing property records.
