Oil Gains Fade After US Seizes Sanctioned Tanker Off Venezuela

SadaNews - Oil prices erased their early gains after the United States seized a sanctioned tanker off Venezuela, following extensive losses in stocks and other high-risk assets.

Brent crude held above $62 a barrel, trimming previous gains of 0.7%. West Texas Intermediate traded below $59. The pressure from disappointing corporate earnings outweighed rising risks due to escalating tensions between Washington and Caracas.

U.S. forces boarded and seized the giant oil tanker in a serious escalation of tensions with Caracas, which the Venezuelan government described as a "piracy act."

Venezuela holds the world's largest oil reserves and exported about 586,000 barrels daily last month. Most of that went to China, although some production from Chevron Corp. in the OPEC member state goes to the U.S. The company stated that its operations are continuing normally.

Ukraine Intensifies Attacks on Russian Targets

Meanwhile, Ukraine attacked a tanker linked to Russia's oil trade as the U.S. pushes for a ceasefire between the two sides. The latest incident means that at least five attacks have occurred on ships connected to Russia since the end of last month.

The rising geopolitical tensions come amid conditions pressing down on crude oil prices, as increased production from OPEC+ and the U.S. is expected to outstrip demand growth, potentially leading to a surplus.

Monthly reports from OPEC and the International Energy Agency are set to be released later on Thursday, which may provide further insights into supply and demand conditions.

Geopolitical Tensions Support Prices

Robert Rennie, head of commodity and carbon research at Westpac Banking, stated that "the U.S. seizure of a sanctioned vessel off Venezuela and Ukraine's attack on another ship from the Russian shadow fleet in the Black Sea should add further to the risk premium due to sanctions and war in the near term."

He added that "the growing massive surplus will pressure prices in 2026," and that Brent crude may remain in the current range of $60 to $65 per barrel for now.

In a related context, U.S. crude inventories fell by 1.8 million barrels last week, according to government data. Stocks at Cushing, Oklahoma, rose after four weeks of decline, but levels at the West Texas Intermediate delivery point remain the lowest for this time of year since 2007.