Oil prices jumped after US President Donald Trump said it would impose a 25% duty on the buyers of Venezuelan oil. West Texas Intermediate (WTI) crude futures on NYNEX rose 11 % and Brent crude futures on ICE rose 6.7 % from their March 5 low.
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" because the reciprocal tariffs he has long threatened are to go into effect. The move is widely regarded as a political manoeuvre aimed at putting pressure on Venezuelan President Nicolás Maduro and also on China, which is the largest importer of Venezuelan oil.
Oil prices rose sharply following the announcement, with WTI futures on the NYMEX rising 1.22 % to $69.11 per barrel on Monday, while Brent futures on the ICE rose 1.16 % to $73 per barrel. Both benchmarks reached their highest levels since March 3, posting gains of 11 % and 6.7 %, respectively, despite a slight decline during Tuesday's Asian session.
Trump called the new oil tariffs a "secondary tariff" aimed at addressing illegal migration from Venezuela. "Venezuela has deliberately and deceitfully sent tens of thousands of high-ranking and other criminals, many of them murderers and people of a very violent nature, to the United States in secret," he claimed.
"Any country that purchases oil and/or gas from Venezuela will be forced to pay the United States a duty of 25 % on any trade they make with our country," He added. According to Reuters, China is the biggest customer of Venezuelan oil, followed by the US, India, Spain, Italy and Cuba.
The duties will also apply to countries that buy Venezuelan oil through third parties, effective April 2, on top of existing tariffs. According to Trump, the new duties will expire one year after the country last purchased Venezuelan oil.
To mitigate the impact on US importers, the country's finance ministry has extended Chevron's licence to produce oil in Venezuela until 27 May. Chevron, a major US oil producer, operates five onshore and offshore projects in Venezuela. Before Chevron's license expired, Venezuela's oil and gas exports reached their highest level since November. The U.S. Treasury Department had previously called on Chevron to cease operations in Venezuela by April 3.
Oil prices bounce off bottom amid rising tensions in the Middle East
Oil prices have rebounded sharply from multi-year lows since early March, driven by escalating geopolitical tensions in the Middle East.
Oil prices rose sharply last week after US military strikes targeted Yemen's Houthi group in the Red Sea, sparking fears of a possible tightening of sanctions on Iranian oil exports. Renewed Israeli military action in Gaza has further heightened fears of a widening Middle East conflict. Additional sanctions on Iran and Venezuela could significantly affect global oil supplies, as both countries' exports have increased since 2022. According to the US Energy Information Administration (EIA), Iran holds 24 % of Middle East oil reserves and 12 % of global reserves. Its oil exports have increased since 2022 following Russia's invasion of Ukraine, and current production is 1.5 million barrels per day, representing 1.4 % of global production.
Meanwhile, peace talks aimed at ending the war in Ukraine continue to hit obstacles as Russia has criticised the West for not lifting sanctions on Russian agricultural exports. The protracted negotiation process has lowered expectations that the US will lift sanctions on Russian oil, which previously put pressure on oil prices.
Chinese stimulus measures boost oil growth
China's pro-growth policies and positive economic data have also improved the outlook for oil demand in that country. The world's largest oil importer has proposed the introduction of further stimulus measures in the wake of Trump's tariffs, which has contributed to a recovery in the oil market. Last week, Beijing announced a special plan to boost domestic consumption, which includes measures to raise wages and boost consumer spending. Meanwhile, retail sales in China rose by 4 % in the first two months of this year, accelerating from 3.7 % in December. This was the fastest growth since October last year.
euronews/ gnews.cz - RoZ
Photo by Zbynek Burival on Unsplash
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