Oil prices climbed on Wednesday, driven by a sharper-than-expected drop in U.S. crude and fuel inventories and mounting concerns over tighter global supply following the U.S. threat of tariffs on Venezuelan crude buyers.
Brent crude settled up 77 cents (1.05%) at $73.79 per barrel, while WTI gained 65 cents (0.94%) to close at $69.65. At their session highs, both benchmarks rose over $1.
According to the EIA, U.S. crude inventories fell by 3.3 million barrels last week, surpassing analyst expectations of a 956,000-barrel draw, as refiners ramped up production.
Concerns over Venezuelan supply disruptions escalated after trade in Venezuelan oil to China stalled following Trump’s announcement of a 25% tariff on imports from any country buying Venezuelan crude. Analysts at Barclays estimate that commercialization challenges could lead to production shutdowns of up to 400,000 barrels per day, potentially costing Venezuela $4.9 billion in revenue.
Chinese refiners are awaiting government guidance on whether to continue purchasing Venezuelan crude, while U.S. sanctions last week also targeted China’s imports from Iran. Analysts suggest OPEC+ may be increasing production in anticipation of U.S. sanctions, aiming to offset potential losses of up to 1.5 million barrels per day from Iran.
Meanwhile, a maritime and energy truce between Russia and Ukraine led to speculation about increased Russian crude supply, capping oil price gains. Analysts believe China and India will likely turn to Russian crude over Venezuelan oil due to U.S. sanctions scrutiny.