Oil prices found stability on Tuesday after a dip of over $1 on the previous day.
The main factors influencing this development were the growing anticipation that the United States might ease sanctions on Venezuela, a prominent oil producer, and increased efforts by Washington to prevent further escalation in the Israel-Hamas conflict.
Brent crude futures saw a modest rise of 29 cents, reaching $89.94 per barrel, while U.S. West Texas Intermediate crude (WTI) increased by 20 cents to $86.86 per barrel as of 0808 GMT.
A key event contributing to this oil market sentiment was the resumption of long-suspended talks between the Venezuelan government and opposition on Tuesday.
President Nicolas Maduro expressed that these talks could benefit the 2024 election. This move has raised hopes of potential sanctions relief from Washington, as multiple sources have indicated.
Since 2019, the U.S. has imposed sanctions on Venezuelan oil exports, a member of the Organization of Petroleum Exporting Countries (OPEC).
These sanctions were initially introduced as punitive measures against Maduro’s government following elections in 2018, which the U.S. regarded as fraudulent due to human rights violations.
However, any substantial increase in oil output from Venezuela is expected to be a gradual process, given the lack of recent investments in the country’s oil infrastructure.
Both Brent and WTI benchmarks experienced significant gains last week, driven by concerns that the Middle East conflict could escalate further.
Brent, the global benchmark, surged by 7.5%, marking its highest weekly gain since February.
Adding to the complexity of the situation, U.S. President Joe Biden is set to visit Israel on Wednesday.
His visit coincides with Israel’s preparations for an intensified offensive against Hamas militants, a campaign that has triggered a humanitarian crisis in Gaza and raised concerns about a broader conflict involving Iran.
Biden’s trip is a delicate balancing act. While expressing support for Israel’s actions against Hamas, the U.S. is also working to rally Arab states to help prevent a wider regional conflict.
Iran, one of the key players in the region, has pledged “preemptive action” through its allies, including the Hezbollah movement in Lebanon.
This situation has prompted concerns about the potential expansion of the conflict.
In summary, oil prices stabilized amid hopes of sanctions relief for Venezuela and heightened efforts to de-escalate the Israel-Hamas conflict.
However, the situation remains precarious, with concerns about a broader regional conflict persisting.