On Friday, October 20th, oil prices minimally fluctuated leading the United States to relax sanctions against Venezuela, enabling increased global oil flow. However, traders maintain a sense of unease over the Israel-Gaza situation possibly escalating.
Brent crude oil hit a new high this month with prices reaching a new high of $93.28 per barrel with a 0.97 percent increase. On the other hand, West Texas Intermediate (WTI) features settled at 89.27$ per barrel with a 1.02 percent increase.
Sanction relaxation
Earlier this year, U.S. officials looked into restructuring Venezuela’s oil sanctions. This would allow an increase in imports by buyers in Europe and other regions.
In light of the recent increase in oil prices, the United States issued a six-month license allowing transactions in Venezuela’s energy sector. This will not expand Venezuela’s oil output immediately. However, it could increase its profits by bringing in some foreign companies to its oilfields again. For now, no policy changes are expected by OPEC+ in light of the U.S. easing sanctions on Venezuela.
In the prior session, oil prices surged by approximately 2% due to fears regarding potential disturbances in global supply chains. These concerns arose following Iran’s call for an oil ban against Israel amidst the Gaza conflict.
Additionally, the United States reported an unexpected reduction in oil inventories, further contributing to the existing tightness in supplies.
Read: Powell: Inflation remains high, new rate hike possible
International ramifications
Saudi Arabia had previously announced that it would continue reducing its oil production until the end of this year. Meanwhile, Japan, the fourth-largest buyer of crude oil, is demanding an increase in oil production. That is to ensure the stability of the global oil market in light of rising concerns of increase in prices.
In the United States, the amount of crude oil and fuel stored decreased last week due to a rise in demand. Specifically, the stockpiles of distillate fuel, including diesel and heating oil, decreased by 3.2 million barrels last week.
On the other hand, crude oil inventories also decreased by 4.5 million barrels to 419.7 million barrels. Additionally, gasoline stocks dropped by 2.4 million barrels to 223.3 million barrels.
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