Oil Rises as Geopolitical Risks Mount From Russia to Venezuela

Core Viewpoint - Oil prices have risen from a four-and-a-half-year low due to the US signaling tougher measures against Russia and a blockade of Venezuelan oil exports, with West Texas Intermediate futures climbing nearly 2.7% to almost $57 a barrel [1] Group 1: US Actions and Market Reactions - The US is considering targeting Russia's shadow fleet of oil tankers and traders facilitating oil exports if a peace agreement with Ukraine is rejected by Vladimir Putin [1] - President Trump announced a blockade of sanctioned oil tankers related to Venezuela, increasing pressure on the country amid a military buildup in the region [4] - The market's reaction to the US government's report on rising domestic fuel inventories was muted, indicating that traders are not overly concerned about supply risks due to the expected surplus [5] Group 2: Supply and Demand Dynamics - Venezuela accounts for less than 1% of global crude supplies, suggesting that the impact of the blockade on oil prices may be limited [2] - The oil market is projected to experience a yearly loss, with supply expected to outpace demand this year and next, driven by OPEC+ increasing output and other producers also raising production levels [4] - The International Energy Agency predicts that the surplus in the oil market will be the largest since the pandemic, indicating emerging signs of market weakness [4] Group 3: Market Sentiment and Trading Strategies - Traders are currently 100% short in both Brent and WTI, reflecting a cautious sentiment in the market [6] - Trend-following commodity advisers require further validation of price movements before adjusting their stop-loss limit orders, indicating a wait-and-see approach among traders [6]