Oil Prices Fall After US Eases Sanctions Against Venezuela

The easing of US sanctions on Venezuelan oil was awaited by the markets, which immediately reacted by falling prices per barrel, despite the war between Israel and Hamas. After an initial drop of about 2%, December-expiring Brent crude futures fell 1.61% to $90 per barrel on Thursday, October 19. US West Texas Intermediate (WTI) crude futures for November delivery fell to $87.09 per barrel, or 1.39 percent.

The United States announced it would suspend sanctions on Venezuela’s oil and gas industry for six months after the government and opposition agreed to organize new presidential elections in this Latin American country. The United States imposed tough economic sanctions after the 2018 elections that current President Nicolas Maduro won but the UN deemed “illegitimate”.

According to international experts, the lifting of US sanctions could allow Venezuela to increase oil production by 200 thousand barrels per day.

In previous days, oil prices rose to their highest levels in two weeks following the escalation of the armed conflict in the Middle East. In addition, markets took into account information about the reduction of strategic oil reserves in the USA.

According to the Washington Department of Energy, from October 7 to October 13, commercial oil reserves in the USA fell by 4.5 million barrels. This significantly exceeded traders’ expectations, says S&P Global Commodity Insights, according to which “the decline is expected to be no more than 30,000 barrels.”

During the trading week ending October 13, oil inventories at the Cushing Terminal, the main delivery point for NYMEX-listed crude oil, fell by 758,000 barrels.

US gasoline inventories fell by 2.4 million barrels, and inventories of other petroleum products fell by 3.2 million barrels. Analysts had forecasted gasoline inventories to decline by 800,000 barrels and derivatives inventories by 900,000 barrels.