Oil Prices Remain Depressed Despite the Return of Venezuela Sanctions

Crude oil prices remained under pressure today despite the news that the U.S. will reimpose oil sanctions on Venezuela after a six-month pause.

Countering this development, the EIA on Wednesday reported another weekly build in crude oil inventories that weighed on benchmarks as it brought the total oil in stock to the highest since June 2023, according to Bloomberg.

As a result, Brent crude and West Texas Intermediate shed a couple of dollars per barrel each, with Brent ending up at around $87 per barrel at the time of writing and WTI slipping below $83 per barrel earlier today.

“The market appears to have discounted the possibility of an Israeli retaliation to Saturday’s Iranian attack,” energy analyst Vandana Hari told Bloomberg. This is an interesting market response given that Israel’s prime minister signaled the country will retaliate for Iran’s attack last weekend.

"I want to make it clear - we will make our own decisions, and the State of Israel will do everything necessary to defend itself," Benjamin Netanyahu said following an urgent visit by the British and German foreign ministers aimed at convincing Israel to avoid a further escalation.

Iran is the third-largest oil producer in OPEC, according to Reuters, and an escalation would almost inevitably involve a disruption of its oil industry as it would make a natural target for an Israeli retaliation.

Meanwhile, an update from JP Morgan about global oil demand may have also helped keep prices lower. The bank said on Tuesday that demand since the start of April has been running at 200,000 bpd below its forecast, at an average daily of 101 million barrels.

Since the start of the year, JP Morgan said, demand for oil had gone up by 1.7 million bpd. This was also below the bank’s forecast, which saw demand growth at 2 million bpd.

By Irina Slav for Oilprice.com

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