Oil pauses gains as Venezuela shipments resume, but Iran concerns loom
Brent futures were trading down 20 cents, or 0.3%, at $65.27 a barrel at 0525 GMT. US West Texas Intermediate crude was down 23 cents, or 0.4%, at $60.92 a barrel
Highlights:
- Venezuela resumes oil exports amid US embargo reversal
- US crude stocks rise, API says, indicating looser supply-demand balance
- Iran protests raise fears of supply disruptions, geopolitical risks
Oil slipped after four days of increases on Wednesday as Venezuela resumed exports and US crude and product inventories rose, though fears of Iranian supply disruptions due to deadly civil unrest loomed over the market.
Brent futures were trading down 20 cents, or 0.3%, at $65.27 a barrel at 0525 GMT. US West Texas Intermediate crude was down 23 cents, or 0.4%, at $60.92 a barrel.
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"Oil prices have already priced in quite a bit of geopolitical risk premium over the last few days in the face of rising turmoil in Iran, compounded by drone attacks in the Black Sea," said Suvro Sarkar, an energy analyst at DBS Bank.
"Unless we see further escalation and chances of actual disruption in oil flows, the market could consolidate at these levels and wait for the next moves in a complex world order," he said. He added that large crude and product builds in the US, reported by the American Petroleum Institute (API) late on Tuesday, may also be weighing on prices.
Crude stocks in the US, the world's biggest oil consumer, rose by 5.23 million barrels in the week ended 9 January, the API reported, citing market sources.
Gasoline inventories rose by 8.23 million barrels, while distillate inventories rose by 4.34 million barrels from a week earlier.
Stockpile data from the US Energy Information Administration will be released later on Wednesday. On Tuesday, a Reuters poll showed that US crude oil stockpiles were expected to have fallen last week, while gasoline and distillate inventories likely rose.
Also weighing on prices, Organization of the Petroleum Exporting Countries (OPEC) member Venezuela has begun reversing oil production cuts made under a US embargo as crude exports were also resuming, three sources said.
Two supertankers departed Venezuelan waters on Monday with about 1.8 million barrels each of crude in what may be the first shipments of a 50-million-barrel supply deal between Caracas and Washington to get exports moving again in the wake of the US capture of Venezuelan President Nicolas Maduro.
Mounting protests in Iran, however, have increased fears of supply disruptions from the fourth-largest OPEC producer. US President Donald Trump on Tuesday urged Iranians to keep protesting and said help was on the way, without specifying what that meant.
"Protests in Iran risk tightening global oil balances through near-term supply losses, but mainly through rising geopolitical risk premium," Citi analysts said in a note, raising their outlook for Brent over the next three months to $70 a barrel.
The Citi analysts noted that so far the protests have not spread to the main Iranian oil producing areas, which has limited the effect on actual supply.
"Current risks are skewed toward political and logistical frictions rather than direct outages, keeping the impact on Iranian crude supply and export flows contained," they said.
