HOUSTON, March 26 (Reuters) – Oil prices climbed on Wednesday, supported by government data showing a decline in U.S. crude and fuel inventories, as well as growing fears about tighter global supply. This came after the U.S. threatened tariffs on nations importing Venezuelan crude.
Brent crude futures rose by 77 cents, or 1.05%, settling at $73.79 a barrel. U.S. West Texas Intermediate (WTI) crude futures gained 65 cents, or 0.94%, closing at $69.65 a barrel. At their peak during the session, both benchmarks had risen by over $1 a barrel.
According to the Energy Information Administration (EIA), U.S. crude oil inventories decreased last week as refineries continued to increase production. Gasoline and distillate stockpiles also dropped. Crude stocks fell by 3.3 million barrels to 433.6 million barrels for the week ending March 21, a larger decline than the 956,000-barrel drop analysts had predicted in a Reuters poll.
On Tuesday, trade in Venezuelan oil to its largest buyer, China, stalled after U.S. President Donald Trump threatened to impose tariffs on countries importing Venezuelan crude. This came just days after U.S. sanctions were placed on China’s imports of Iranian oil. On Monday, Trump signed an executive order authorizing 25% tariffs on imports from any country purchasing Venezuelan crude and liquid fuels.
“There is concern in the market that this oil could be lost,” said John Kilduff, partner at Again Capital LLC in New York.
Barclays analysts warned that the discount on Venezuela’s oil could increase to 35%, and difficulties in selling it might cause bottlenecks, potentially leading to a shutdown of production, which could affect up to 400,000 barrels per day, more than half of Venezuela’s exports. Analysts also noted that Venezuela could lose $4.9 billion in oil revenue, representing over 10% of its GDP.
Oil is Venezuela’s main export, and China has already been targeted by U.S. import tariffs. Chinese traders and refiners said they were waiting for direction from Beijing on whether to halt purchases from Venezuela.
“Physical markets are tightening as U.S. sanctions shift flows,” said Ashley Kelty, analyst at Panmure Liberum.
Last week, the U.S. imposed new sanctions on Iran’s oil exports, targeting companies like Shouguang Luqing Petrochemical, an independent refinery in China’s Shandong province, and vessels supplying oil to such refineries.
“OPEC+ may increase production to offset potential losses from Iranian exports, preventing disruptions to global oil prices,” said Jorge Leon, head of geopolitical analysis at Rystad Energy.
However, U.S. efforts to reach deals with Ukraine and Russia to halt sea and energy target attacks limited oil price increases. Washington also agreed to push for the lifting of some sanctions on Moscow. This helped offset some of the price support driven by Venezuela-related concerns, Kilduff said, adding that more Russian oil could appear on the market.
“Both China and India are likely to turn to Russian oil, which is under sanctions, instead of buying more risky Venezuelan crude,” said Alex Hodes, analyst at StoneX.
Kyiv and Moscow both relied on Washington to enforce the agreements, though both sides expressed doubts about the other’s commitment.
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