Oil prices pause rally amid Venezuela supply resumption
Kyiv • UNN
Oil prices fell after four days of gains as Venezuela resumed exports and US crude and product inventories rose. However, concerns about supply disruptions from Iran continue to impact the market.
Oil prices fell on Wednesday after four days of gains, as Venezuela resumed exports and US crude and product inventories rose, although concerns about supply disruptions from Iran due to deadly civil unrest continued to weigh on the market, UNN reports with reference to Reuters.
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Brent crude futures fell 20 cents, or 0.3%, to $65.27 a barrel at 05:25 GMT (07:25 Kyiv time). US West Texas Intermediate crude fell 23 cents, or 0.4%, to $60.92 a barrel.
"Oil prices have already priced in a significant geopolitical premium over the past few days amid instability in Iran, exacerbated by drone attacks in the Black Sea," said Suvro Sarkar, an energy analyst at DBS Bank.
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"Unless we see further escalation and the likelihood of real disruptions to oil flows, the market may consolidate at these levels and await the next steps in a complex global order," he said. He added that a significant increase in US crude and product inventories reported by the American Petroleum Institute (API) could also weigh on prices.
US crude inventories, in the world's largest oil consumer, rose by 5.23 million barrels in the week ended January 9, API reported, citing market sources. Gasoline inventories rose by 8.23 million barrels, and distillate inventories by 4.34 million barrels compared to the previous week. A Reuters poll showed that US crude inventories were expected to decline last week, while gasoline and distillate inventories were likely to rise.
Also affecting prices was the fact that Venezuela, a member of the Organization of the Petroleum Exporting Countries (OPEC), began to reverse oil production cuts imposed under US embargoes, as oil exports also resumed, three sources said.
On Monday, two supertankers carrying approximately 1.8 million barrels of oil each departed Venezuelan waters, which could be the first delivery under a 50-million-barrel supply deal between Caracas and Washington, aimed at restoring exports after the US seized Venezuelan President Nicolas Maduro.
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However, growing protests in Iran have heightened fears of supply disruptions from OPEC's fourth-largest oil producer. US President Donald Trump on Tuesday called on Iranians to continue protesting and said help was on the way, without specifying what that meant.
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"The protests in Iran risk prolonging the global oil balance through short-term supply losses, but mainly through an increased geopolitical risk premium," Citi analysts said in a note, raising their Brent price forecast for the next three months to $70 a barrel.
Citi analysts noted that so far, the protests have not spread to Iran's main oil-producing regions, limiting the impact on actual supplies.
"Current risks are skewed towards political and logistical friction rather than direct disruptions, which limits the impact on Iranian oil supplies and export flows," they said.