Oil extended declines on Wednesday as investors digested statements from President Donald Trump that the U.S. had reached a deal to import up to $2 billion worth of Venezuelan crude, a move that would lift supplies to the world’s largest oil consumer.
Brent crude futures were down 40 US cents, or 0.7 per cent, to trade at US$60.31 a barrel by 11:05 a.m. ET after falling to US$59.88 a barrel earlier in the session.
U.S. West Texas Intermediate crude fell 74 US cents, or 1.3 per cent, to US$56.39 a barrel, after dropping to as low as US$55.76.
Both benchmarks slipped more than US$1 during the previous trading session, with market participants expecting ample global supply this year.
The United States and Venezuela have reached an agreement to export up to $2-billion worth of Venezuelan crude to U.S. ports, President Donald Trump said on Tuesday, a move that could redirect oil shipments meant for China and ease pressure on Venezuela’s sanctioned oil industry.
Reuters
The deal between Washington and Caracas could initially require cargoes that were bound for China to be rerouted, sources told Reuters.
Venezuela has millions of barrels of oil loaded on tankers and in storage tanks that it has been unable to ship since mid-December due to a blockade on exports imposed by Trump.
The blockade was part of a U.S. pressure campaign against Venezuelan President Nicolas Maduro’s government that culminated in U.S. forces capturing him over the weekend.
Top Venezuelan officials have called Maduro’s capture a kidnapping and accused the U.S. of trying to steal the country’s vast oil reserves.
Venezuela will be “turning over” between 30 million and 50 million barrels of “sanctioned oil” to the U.S., Trump wrote in a social media post on Tuesday.
“The volumes are quite small in a larger context,” SEB commodities analyst Ole Hvalbye said. “If you look at the U.S. SPR in total, that’s now 413 million barrels. So comparing that to 30 or 50 million barrels, the volumes are not so substantial.”
Adding to geopolitical risk, the U.S. was attempting to seize a Venezuela-linked oil tanker after a more than two-week-long pursuit across the Atlantic, two U.S. officials told Reuters on Wednesday.
The seizure, which could stoke tensions with Russia, came after the tanker, originally known as the Bella-1, slipped through a U.S. maritime “blockade” of sanctioned tankers and rebuffed U.S. Coast Guard efforts to board it.
Providing some support to prices, U.S. crude stocks dropped by 3.8 million barrels to 419.1 million barrels in the week ended January 2, the Energy Information Administration said. Analysts had estimated a 447,000-barrel rise.
U.S. gasoline stocks increased by 7.7 million barrels in the week, the EIA said, compared with analysts’ expectations in a Reuters poll for a 3.2 million-barrel build.
Distillate stockpiles, which include diesel and heating oil, climbed by 5.6 million barrels in the week versus expectations for a 2.1 million-barrel rise.
Morgan Stanley analysts estimated the oil market could reach a surplus of as many as 3 million barrels per day in the first half of 2026, based on weak growth in demand last year and rising supply from OPEC and non-OPEC producers.
However, the prospect of higher, cheaply extracted Venezuelan oil exports could pause expansion of productive capacity in the U.S. and elsewhere, analysts at BMI, a unit of Fitch Solutions, said in a note on Wednesday.
Venezuela has been selling its flagship crude grade, Merey, at around US$22 per barrel below Brent for delivery at its ports.
“That raises the expected price of oil over the medium term, especially if the Venezuelan regime survives,” the BMI analysts said.