Oil prices rise slightly as markets assess supply risks

Oil drilling rigs

Oil prices increased slightly on Friday as the US stepped up economic pressure on Venezuelan oil shipments and carried out airstrikes in northwestern Nigeria at the request of the Abuja government.

Brent crude futures rose 0.1%, or six cents, to $62.3 per barrel by 04:56 GMT.

US West Texas Intermediate (WTI) crude also gained six cents to $58.4 per barrel.

Venezuela and Nigeria are among the world’s major oil producers. Although Nigeria’s oil fields are mainly located in the south of the country, the airstrikes have heightened geopolitical risks.

The White House has instructed US military forces to focus on “enforcing a ban” on Venezuelan oil for at least the next two months, signaling that Washington is currently prioritizing economic rather than military means to pressure Caracas.

“Due to the Christmas holiday closure, year-end market activity remained relatively subdued,” said Tong Chuan, an analyst at Galaxy Futures. “Supply-side disruptions have become the primary driver of oil prices.”

Oil prices, though, are on course for their steepest annual decline since 2020 as investors weighed US economic growth and assessed the risk of supply disruptions including in Venezuela.

Brent and WTI prices are on track to drop about 16% and 18%, respectively, this year, their steepest declines since the COVID pandemic hit oil demand, as supply is expected to outpace demand next year.

The US Energy Information Administration is due to release official inventory data on Monday, later than usual due to the Christmas holiday. The data should give a picture of demand in the world’s biggest oil consumer.