Oil Drops, U.S Gives Chevron Deadline to Stop Venezuela Operation
Oil prices continue to decline in the global commodities market amidst uncertainties, tariff combat and latest deadline the U.S administration gave Chevron to window operation in Venezuela.
The crude price also face pressure from latest resolve of the Organisation of Petroleum Exporting Countries and allied members (OPEC+) to increase production output amidst President Donald Trump’s threats.
On Wednesday, OPEC+ confirmed its plan to increase production in April, adding more oil to the global market and supporting lower prices, while US tariffs on trading partners raised concerns about demand.
The international benchmark Brent crude decreased by 0.05%, trading at $70.92 per barrel, down from $70.96 at the close of the previous session.
The US benchmark West Texas Intermediate declined by 0.3%, settling at $67.75 per barrel, compared to its prior session close of $67.95.
The oil market came under intense pressure again yesterday, with ICE Brent settling a little more than 0.8% lower.
U.S WTI is trading lower in early morning trading today. Brent oil fell below $70 per barrel for the first time since October 2024, amid fears of a deepening trade war and weakening fuel consumption.
The prospect of rising OPEC+ supply, combined with intensifying uncertainty over tariffs, hit oil market sentiment. Overnight, there were suggestions that the Trump administration is considering some tariff relief on imports from Canada and Mexico.
But heightened uncertainty is sending investors to the sidelines. This is evidenced by a reduction in speculative positioning in both WTI and Brent in recent weeks.
On OPEC+ side, Saudi Arabia, Kuwait, the United Arab Emirates, Oman, Kazakhstan, Iraq, Russia and Algeria curbed output by 2.2 million barrels per day.
These countries will increase production by 138,000 barrels per day next month. While the US started to impose tariffs on Mexico and Canada, one of its most important trading partners, the country’s increase in tariffs on China, the world’s largest crude oil importer, feeds concerns in the markets that the trade war may deepen and global trade may be disrupted.
The trade war initiated by US President Donald Trump through tariffs is expected to slow economic growth in the world’s largest oil-consuming country and negatively affect fuel consumption.
Meanwhile, the American Petroleum Institute (API) reported that US commercial crude oil stocks fell by 1.45 million barrels last week compared to the previous week, surpassing the market expectation of a 300,000-barrel decrease.
The larger-than-expected decline in crude stocks supported the downward trend in oil prices, pointing to weakening demand in the US. The US Energy Information Administration (EIA) is expected to announce the official inventory data during the day.
The US administration of Donald Trump is giving Chevron Corp. one month to stop producing oil in Venezuela, delivering a heavy blow to President Nicolas Maduro’s autocratic regime. The US Treasury set an April 3 deadline for the oil major to wrap up operations in the country, much less than the normal six-month wind-down period.
The narrow time frame is an unexpected hit to Maduro, significantly ratcheting up pressure on him to quickly make a deal over democratic reforms and accepting more migrants from the US.
Venezuela’s political situation remains in crisis after Maduro declared victory last year after elections that were widely considered fraudulent. Following the vote, opposition leader María Corina Machado presented evidence that she says proves Maduro lost by a significant margin.
Despite sanctions, Chevron previously had a license to operate in the country and export crude oil to the US. As production stops, 200,000 b/d of supply is at risk, according to ING note, saying this will leave US refiners looking for alternative heavy grades of crude oil just as other suppliers — Canada and Mexico — face tariffs.
