Oil Jumps 2% on U.S. Seizures of Venezuela Tankers

SECAUCUS, NJ (DTN) – Oil futures jumped by 2% on Monday, rebounding sharply from last week’s multi-year lows, on reports that U.S. forces had seized in less than a fortnight a second tanker carrying Venezuelan oil and were actively pursuing a third.

The killing of a Russian general which Moscow blamed on Ukraine, meanwhile, threatened to inflame the war between the two states, which could keep sanctions on Russian oil.

U.S. forces seized and anchored a tanker carrying Venezuelan oil off Texas on December 10 and apprehended a Panama-flagged vessel in the Caribbean on December 20, media reports said. The U.S. Coast Guard was also actively in pursuit of another vessel laden with Venezuelan oil, officials said at the weekend.

The actions came after the Trump administration announced last week a naval blockade around Venezuela to prevent so-called sanctioned tankers from accessing oil from the Latin American nation and OPEC member. The tanker seizures have raised concerns about near-term oil supplies despite a global glut.

U.S. President Donald Trump, who supports Venezuelan democratic opposition leader Maria Corina Machado, has repeatedly spoke of a military land assault against the government of Venezuelan President Nicolas Maduro, saying the US wants to reclaim its “land, oil rights and assets” in the Latin American state. U.S. oil firms ExxonMobil and ConocoPhillips were expelled in 2007 from production sharing contracts in Venezuela, with Chevron being the only American energy operator left there.

In Russia, a senior general was in charge of the operational training for the army was killed after a bomb exploded in his car, according to investigators who pointed suspicion for the assassination at Ukraine.

The heightened oil supply concerns and geopolitical tensions combined to push the NYMEX WTI crude for January delivery up by $1.20, or 2.1%, to $57.72 bbl. Last week, January WTI hit a 2021 low of $54.89 on concerns of brightening prospects for Russia-Ukraine peace that could eventually add millions of currently sanctioned Russian barrels to an oversupplied market.

ICE Brent futures for February climbed by $1.34, or 2.2%, to $61.81 bbl. February Brent slid beneath the key $60 bbl mark last week.

Downstream, NYMEX front-month gasoline advanced by $0.0332, or 1.9%, to $1.7414 gallon, after dropping below the $1.60 mark last week.

Front-month ULSD rose by $0.0385, or 1.8%, to $2.1607 gallon.

NYMEX trading hours will experience some changes this week due to the impending Christmas holiday. Oil markets will close at 1:00 p.m. Eastern Time (ET) on December 24, earlier than their regular schedule, and will be shut on December 25. Regular trading will commence on December 26.