WTI crude futures experienced a decline, retreating from earlier gains as the potential return of Venezuelan oil exports tempered anxieties surrounding supply disruptions arising from escalating unrest in Iran. Market sentiment is grappling with the balance between geopolitical risks and potential increases in supply.
- WTI crude futures fell below $59 per barrel.
- Resumption of Venezuelan oil exports is anticipated.
- Protests in Iran raise concerns about supply disruptions, potentially impacting shipments from the Strait of Hormuz.
- Iran exports nearly 2 million barrels per day and is OPEC’s fourth-largest producer.
- The US is considering intervention in Iran, raising supply fears.
- Venezuela is expected to release up to 50 million barrels of previously sanctioned crude to the US.
- US oil companies are arranging tanker shipments from Venezuela, with the first vessel potentially loaded by next week.
The asset’s price is subject to opposing forces. On one hand, geopolitical instability and the potential disruption of a significant oil producer’s exports introduce upward pressure on prices. Counteracting this, the prospective return of previously sanctioned oil to the market is expected to increase supply and thereby moderate price increases or even push prices lower. The near-term trajectory of the asset will likely be determined by the relative magnitude and timing of these competing factors.