US President Donald Trump has ordered a blockade on oil tankers that are sanctioned, affecting those going to and from Venezuela. This decision comes after the US labeled the Venezuelan government as a “foreign terrorist organization” because of activities like stealing assets, terrorism, and human and drug trafficking. As a result, oil traders have noticed prices rising, anticipating lower Venezuelan oil exports. Currently, the price of WTI oil is at $55.55, which is a 0.86% increase. WTI oil is a key market benchmark, produced in the US, and is known for its low gravity and sulfur content. The price is shaped by supply and demand, political events, and the value of the US Dollar.

Factors Influencing Oil Prices

Weekly reports from the American Petroleum Institute and Energy Information Agency show oil inventories that affect WTI prices by reflecting shifts in supply and demand. Decisions made by OPEC also play a role; cutting production quotas tightens supply and can raise prices, while increasing production may lower them. OPEC+, which includes Russia and other non-OECD countries, affects global oil pricing significantly. Remember when the market reacted to the potential for a full blockade on Venezuela, with WTI trading around $55 a barrel? Now, as WTI approaches $82, it’s clear the supply situation has changed. Initial fears have settled, and new factors are now influencing our trading choices. In reality, a full blockade did not take place, and the US has eased some energy sanctions. Consequently, Venezuela’s oil production has been slowly recovering, recently reaching about 950,000 barrels per day. This consistent, though delicate, supply is now something we need to consider in the global market. This situation contrasts with OPEC+’s current approach to managing supply. Last month, the group, including Russia, decided to prolong their production cuts of 2.2 million barrels per day into the second quarter of 2026 to support prices. Their commitment is helping create a strong price floor, countering concerns about slowing global economic growth.

Supply and Demand Dynamics

On the demand side, recent data show a weakening outlook. The latest EIA report reflected an unexpected increase in US crude inventories of 1.5 million barrels, indicating that consumption is not as strong as expected. This comes amid PMI reports from China and Europe suggesting a slowdown in manufacturing. In the coming weeks, we can expect a clash between managed supply and decreasing demand, which may lead to increased market volatility. Traders should explore options strategies, such as buying straddles, to benefit from significant price movements without choosing a specific direction. We will be closely monitoring WTI to see if it drops below the $80 support level or tests the $86 resistance. Create your live VT Markets account and start trading now.

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