Oil Prices Increase Following Revocation of Chevron’s Venezuela License
On February 27, oil prices increased after President Trump revoked Chevron’s license to operate in Venezuela, which is expected to affect crude oil exports significantly. Brent crude rose 0.33% to $72.77 per barrel, and WTI increased by 0.26% to $68.80 per barrel. This is noted against prior lows driven by rising fuel inventories and geopolitical tensions.
On February 27, oil prices experienced an increase for the first time in three days amid renewed supply concerns following U.S. President Donald Trump’s decision to revoke a license that permitted Chevron to operate in Venezuela. As of 0328 GMT, Brent crude oil futures rose by 24 cents, or 0.33%, to reach $72.77 per barrel, while U.S. West Texas Intermediate (WTI) crude futures increased by 18 cents, or 0.26%, totaling $68.80 per barrel. This surge comes after oil prices had fallen to their lowest levels since December 10, due to an unexpected rise in U.S. fuel inventories, coupled with faltering demand and tentative peace negotiations between Russia and Ukraine.
President Trump’s announcement indicated a reversal of the Chevron operating license initially granted by former President Joe Biden over two years ago. The cancellation affects Chevron’s ability to export approximately 240,000 barrels of crude per day from Venezuela, which constitutes over a quarter of the country’s total oil production. Hiroyuki Kikukawa, president of NS Trading, noted that the news contributed to a market rebound following previous sell-offs, especially against the backdrop of Russian-Ukrainian ceasefire discussions.
Furthermore, the market remains optimistic about potential purchases from the U.S. Strategic Petroleum Reserve (SPR), particularly since WTI prices were nearing their lowest levels in over two months. Last week’s announcements from Trump indicated a swift plan to replenish the SPR, criticizing the Biden administration’s use of the reserve to temper gasoline prices. Market analysts are particularly focused on the forthcoming peace talks regarding Russia and Ukraine and their implications for energy resources.
Recent data showed a surprising decline in U.S. crude oil stockpiles, correlating with increased refining activities; however, gains were noted in gasoline and distillate inventories. According to Kikukawa, seasonal factors have likely exhausted the sell-off driven by the increase in product inventories as demand shifts during off-peak seasons. Additionally, Goldman Sachs outlined that the U.S. government’s pursuit of both commodity dominance and price affordability supports a baseline for Brent crude oil prices between $70 to $85, a range conducive to enhanced U.S. supply growth.
In summary, oil prices have risen following President Trump’s decision to rescind Chevron’s Venezuela license, amplifying market supply concerns. This move has generated optimism for U.S. Strategic Petroleum Reserve purchases and reflects ongoing geopolitical developments involving Russia and Ukraine. Additionally, current storage data indicates fluctuations in supply and demand, while market predictions suggest a stable price range conducive to positive supply growth.
Original Source: theedgemalaysia.com
