On Monday, international oil prices rose by about 1%, bolstered by news that U.S. President Trump announced plans to impose a 25% tariff on oil and gas imports from Venezuela. However, concerns over OPEC+ production increments and the potential return of Russian crude to the market limited the gains.
This new initiative by the Trump administration aims to increase economic pressure on Venezuela. Meanwhile, the U.S. has also asked Chevron to completely wind down its oil operations and exports in Venezuela by May 27, extending the original deadline by 30 days after March 4. This grace period somewhat eases Chevron's pressure but adds uncertainty for other buyers of Venezuelan oil, as the implementation method of the tariff remains unclear.
By Monday's close, Brent crude futures were up 84 cents, or 1.2%, at $73 per barrel; U.S. WTI crude futures rose 83 cents, or 1.2%, settling at $69.11 per barrel.
Dennis Kissler, Senior Vice President of Trading at BOK Financial, stated: "The reduced oil supply from Venezuela to the global market creates a supply shock, forming a bullish factor for oil prices."
However, the market's uptrend is being restrained by multiple factors. Several sources revealed that OPEC+ plans to increase production in May for the second consecutive month to compensate for previous overproduction by some member countries and to address the currently relatively stable price situation. Simultaneously, U.S. and Russian officials are holding ceasefire talks in Saudi Arabia about the Ukraine conflict. If an agreement is reached, it could lead Russia to increase its crude oil supply to the global market, representing a potential downside pressure for oil prices.
Kissler noted that a large-scale return of Russian oil to the international market might become a major bearish factor for oil prices.
Furthermore, Trump signaled more in terms of tariff policies. He stated that he will soon announce tariffs on automobiles, aluminum, and pharmaceuticals, and has instructed his trade team to negotiate with their Chinese counterparts, continuing his expression of flexibility regarding tariff policies.
Overall, the crude oil market is fluctuating amid multiple influences, with short-term attention still needed on supply-demand dynamics, geopolitical developments, and the specifics of U.S. tariff policy implementation.
