Oil prices inched up on Wednesday as investors weighed supply risks following the U.S. decision to bar Chevron from exporting crude from Venezuela under a new asset authorization. However, expectations of increased output from OPEC+ continued to limit gains.
Brent crude futures rose 25 cents, or 0.4 percent, to $64.34 a barrel by 03:45 GMT (currently above $63.85), while U.S. West Texas Intermediate crude gained 24 cents, or 0.4 percent, to $61.13 a barrel (currently at $61.20).
The Trump administration has issued a new authorization for U.S.-based Chevron that permits it to retain assets in Venezuela but prohibits exporting oil or expanding its operations. Reuters reported on Tuesday, citing sources, that “the loss of Chevron’s Venezuelan barrels in the U.S. will leave refiners short and thus relying more on Middle Eastern crude,” as noted by Robert Rennie, head of commodity and carbon strategy at Westpac.
U.S. President Donald Trump had revoked the previous license on February 26. In recent years, licenses granted to Chevron and other foreign companies have contributed to a slight recovery in sanction-hit Venezuelan oil output, bringing it to approximately 1 million barrels per day.
Read more: Crude oil prices edge down to $63.85 as OPEC+ meeting approaches
Upcoming OPEC+ meeting
However, price gains were capped on Wednesday due to expectations that OPEC+ will likely decide to increase output during a meeting scheduled for this week. A full meeting of the Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, is set for Wednesday, though no policy changes are anticipated. A potential output hike for July may be determined on Saturday when eight members of the group engage in discussions, according to sources.
“Oil prices have moved only marginally in the last couple of sessions as the industry largely braces for an oversupplied second half of the year,” Reuters reported, citing Priyanka Sachdeva, senior market analyst at Phillip Nova. Sachdeva further noted that OPEC members’ non-compliance with production quotas and Trump’s trade policies adversely affect global oil demand.
The market also received some support after Trump indicated earlier this week that he was considering new sanctions on Russia. “This increases the risk of further sanctions against Russia, putting Russian energy flows at risk,” stated ING commodities strategists on Wednesday.
