Global Oil Market Dynamics Shift as Israel Embargo Concerns Wane, Venezuela Sanctions Ease
- Posted on October 19, 2023
- News
- By Arijit Dutta
- 275 Views
Oil prices witnessed a decline on Thursday, reversing the previous session's gains. This was primarily due to the fact that OPEC showed no inclination to support Iran's call for an oil embargo on Israel. Simultaneously, the United States announced plans to ease sanctions on Venezuela, thus allowing more oil to enter the global market.
Oil prices witnessed a decline on Thursday, reversing the
previous session's gains. This was primarily due to the fact that OPEC showed
no inclination to support Iran's call for an oil embargo on Israel.
Simultaneously, the United States announced plans to ease sanctions on
Venezuela, thus allowing more oil to enter the global market.
Brent futures for December saw a decrease of 74 cents,
reaching $90.76 per barrel, while US West Texas Intermediate (WTI) futures for
November, expiring on Friday, dropped by 57 cents to trade at $87.75 per
barrel. The more active December WTI was down by 51 cents, settling at $86.76
per barrel at 0047 GMT.
In the previous session, oil prices had climbed by about
2%. This surge was fueled by concerns about potential disruptions to global
supplies following Iran's call for an oil embargo on Israel amid the conflict
in Gaza. Additionally, the United States, the world's largest oil consumer,
reported a larger-than-expected inventory draw, further tightening the already
limited supplies.
According to sources, the Organization of the Petroleum
Exporting Countries (OPEC) has no immediate plans to act on Iran's appeal. This
has alleviated concerns regarding possible disruptions in oil flow.
While OPEC is not actively considering an oil boycott on
Israel, experts believe that oil will play a significant role in the ongoing
conflict. RBC Capital Markets expressed this sentiment in a note.
Israel primarily imports around 250,000 barrels per day
(bpd) of oil, mainly from Kazakhstan, Azerbaijan, Iraq, and various African
countries. Analysts at Citi suggested that an embargo from Kazakhstan and
Azerbaijan, strong Israeli allies, is unlikely.
The United States issued a six-month license authorizing
transactions in Venezuela's energy sector. This move comes after an agreement
was reached between the Venezuelan government and the country's political
opposition to ensure fair elections in 2024.
The easing of sanctions on Venezuela could potentially help stabilize global oil prices, which have been affected by the Israel-Hamas conflict, sanctions on Russia, and OPEC+ decisions to reduce output. However, Venezuela will require investments to boost its output, especially after years of sanctions.
Also Read: Vivek Agnihotri Edits National Film Awards Photo, Exposes Rift With Karan Johar
Recent data from the Energy Information Administration
revealed that U.S. crude oil and fuel inventories decreased last week due to
rising demand for diesel and heating oil. Distillate fuel stockpiles fell by
3.2 million barrels, while crude inventories fell by 4.5 million barrels, and
gasoline fell by 2.4 million barrels.
Furthermore, it's anticipated that Russia's oil exports
through its western seaports in November could decrease by approximately
300,000 bpd as domestic refineries are expected to increase runs following the
end of seasonal maintenance.
In conclusion, the global oil market is experiencing a shift in dynamics as concerns over an Israel embargo recede and Venezuela sanctions are eased, impacting oil prices and supply levels.