Crude oil futures traded higher on Wednesday morning after US President Donald Trump ordered ‘a total and complete blockade’ of all sanctioned oil tankers going into and out of Venezuela.
At 9.59 am on Wednesday, February Brent oil futures were at $59.66, up by 1.26 per cent, and February crude oil futures on WTI (West Texas Intermediate) were at $55.88, up by 1.36 per cent. December crude oil futures were trading at ₹5062 on Multi Commodity Exchange (MCX) during the initial hour of trading on Wednesday against the previous close of ₹5071, down by 0.18 per cent, and January futures were trading at ₹5076 against the previous close of ₹5071, up by 0.10 per cent.
In a post on the social media platform Truth Social, Trump said: “Venezuela is completely surrounded by the largest Armada ever assembled in the History of South America. It will only get bigger, and the shock to them will be like nothing they have ever seen before — Until such time as they return to the United States of America all of the Oil, Land, and other Assets that they previously stole from us.
“The illegitimate Maduro Regime is using Oil from these stolen Oil Fields to finance themselves, Drug Terrorism, Human Trafficking, Murder, and Kidnapping. For the theft of our Assets, and many other reasons, including Terrorism, Drug Smuggling, and Human Trafficking, the Venezuelan Regime has been designated a FOREIGN TERRORIST ORGANIZATION. Therefore, today, I am ordering A TOTAL AND COMPLETE BLOCKADE OF ALL SANCTIONED OIL TANKERS going into, and out of, Venezuela.”
In their Commodities Feed for Wednesday, Warren Patterson, Head of Commodities Strategy of ING Think, and Ewa Manthey, Commodities Strategist, said oil prices have bounced higher in early-morning trading on Wednesday, after Trump ordered a blockade of sanctioned oil tankers entering and leaving Venezuela. This follows the US seizing an oil tanker off the coast of Venezuela last week. Venezuela exported around 600,000 barrels a day of oil in November. It’s likely that these volumes will fall given the latest developments. The bulk of this oil is shipped to China, they said.
The oil market sell-off accelerated Tuesday. ICE Brent settled 2.7 per cent lower, breaking below $60 a barrel to its lowest level since February 2021. “This pressure comes from a growing surplus outlook. Hopes for a Russia-Ukraine ceasefire will undoubtedly add to the downward pressure. As our oil balance shows, the peak of the surplus is expected in the first quarter of 2026. However, with every quarter of next year in surplus, inventories should grow throughout 2026, putting further pressure on oil prices. There are clear supply risks to our view. Russian risks are well telegraphed, but there are clear risks to the Venezuelan oil supply,” they said.
Meanwhile, the industry body American Petroleum Institute’s (API) data showed a decline in crude oil inventories in the US for the week ending December 12. According to API data, US crude oil inventories declined by 9.3 million barrels for the week ending December 12. Official data from the US Energy Information Administration is expected later on Wednesday.
December natural gas futures were trading at ₹358.70 on MCX during the initial hour of trading on Wednesday against the previous close of ₹356, up by 0.76 per cent.
On the National Commodities and Derivatives Exchange (NCDEX), December cottonseed oilcake contracts were trading at ₹3100 in the initial hour of trading on Wednesday against the previous close of ₹3038, up by 2.04 per cent.
December dhaniya futures were trading at ₹9762 on NCDEX in the initial hour of trading on Wednesday against the previous close of ₹9854, down by 0.93 per cent.