Oil prices steady as market assesses reports of possible US sanctions on Russia, Venezuela blockade

LONDON: Oil prices steadied on Thursday as investors assessed the likelihood of further U.S. sanctions against Russia and the supply risks posed by a blockade of Venezuelan oil tankers.

Brent crude dropped 1 cent to $59.67 per barrel at 1133 GMT. U.S. West Texas Intermediate crude was up 5 cents at $55.99 per barrel.

U.S. intentions to impose more sanctions against Russia and its threatened blockade of tankers under sanctions and carrying Venezuelan oil pushed prices higher, PVM analyst John Evans said.

On Wednesday, Bloomberg reported that the U.S. is preparing another round of sanctions on Russia’s energy sector in the event Moscow does not agree to a peace deal with Ukraine, citing people familiar with the matter. A White House official told Reuters President Donald Trump had not made any decisions on Russian sanctions.

Further measures targeting Russian oil could pose an even bigger supply risk to the market than Trump’s announcement on Tuesday that the U.S. would blockade tankers under sanctions entering and leaving Venezuela, ING analysts said in a note.

The European Union on Thursday imposed sanctions on 41 more ships in Russia’s shadow fleet, taking the total of designated vessels to almost 600.

Meanwhile, Britain imposed sanctions on 24 individuals and entities as part of its Russia sanctions regime, including on Russian oil companies Tatneft and Russneft, a government notice showed on Thursday.

The Venezuela blockade could affect 600,000 barrels per day of Venezuelan oil exports, mostly to China, but 160,000 bpd of exports to the U.S. would likely continue, ING said. Chevron vessels were continuing to depart for the U.S. under a previous authorisation from the U.S. government.

Most other Venezuelan exports remained on hold on Wednesday, although state oil company PDVSA restarted loading crude and fuel cargoes after suspending operations because of a cyberattack, sources and customs data indicated.

It was not clear how a U.S. blockade would be enforced. The U.S. Coast Guard last week took the unprecedented step of seizing a Venezuelan oil tanker and sources said the U.S. was preparing for more such interdictions.

Venezuelan crude makes up around 1% of global supplies.