(RTTNews) – Crude oil rose on Friday on oversupply concerns as geopolitical tensions over the Russia-Ukraine war and the US-Venezuela standoff showed no signs of resolution.
WTI crude oil for January delivery was last seen trading up $0.35 (or 0.59%) at $60.02 a barrel.
The end of the more than four-year-long Russia-Ukraine war could result in the lifting of sanctions imposed by the US and the West on Russian oil exports and thus allow the free flow of Russian oil into the markets, which would ultimately lower oil prices.
Serious efforts by the US to end the conflict have raised hopes that oil prices may soon fall.
However, US mediation failed to reach the next level in ending the Russia–Ukraine war, with Russia adamant in its demand to retain the territories it occupied in Ukraine and Ukraine being opposed to giving up any territory.
On Tuesday, US Envoy to Russia Steven Witkoff spoke with Russian President Vladimir Putin about the peace plan launched by US President Donald Trump. However, the discussion ended without any success.
Ukraine-friendly countries in Europe complicated the situation by warning Ukraine that the US might betray Ukraine’s national interests.
Putin countered by claiming that some European leaders were united in derailing the peace process. He even threatened that if Ukrainian troops did not withdraw from the eastern Donbass region, Russia would occupy it by force.
The US team is meeting with Ukrainian negotiators to hear their demands and plan next steps.
Today, Russia said they were awaiting a response from the White House or Donald Trump after Tuesday’s discussion.
In the southern Caribbean region, the US is apparently continuing its military buildup to attack Venezuela.
Accusing Venezuela of promoting drug trafficking and illegal human trafficking that crosses the borders to enter the US, Trump’s administration is looking for ways to change the current regime.
However, Venezuelan President Nicolas Maduro denied the claims and said the US wanted to seize his country’s rich oil reserves under false pretenses.
Venezuela is currently pumping about 1.1 million barrels per day. Although this is a small proportion in terms of global flows, about 67% of production is “heavy crude” for which China is the major buyer.
In the event of US military incursion, China would likely join hands with Venezuela.
Since this crisis could escalate into an all-out war, the risk premium on crude oil has increased.
Recent data from the US Energy Information Administration showed that crude oil inventories increased by 0.57 million barrels for the week ending November 28, sparking concerns of oversupply. This data is a leading indicator of the supply-demand balance in the oil trade.
The increase in inventories shows that supply is exceeding demand which is putting downward pressure on oil prices.
The focus now turns to the US Federal Reserve meeting next week, where an interest rate cut is imminent based on recent US jobs and inflation data.
A rate cut could put pressure on the greenback and consequently impact oil prices as oil is traded in US dollars.
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