Oil steadies on hopes US will ease sanctions on Venezuela

A worker pumps fuel at a gas station of state-run oil firm PDVSA, in Caracas, Venezuela, Dec 2, 2022. REUTERS/Gaby Oraa/File Photo

SINGAPORE  – Oil prices steadied on Tuesday after a more than $1 slide on Monday amid hopes the U.S. would ease sanctions on producer Venezuela and as Washington stepped up efforts to prevent an escalation of the war between Israel and Hamas.

Brent crude futures were up 16 cents at $89.81 a barrel, while U.S. West Texas Intermediate crude (WTI) was down 1 cent at $86.65 a barrel as of 0632 GMT.

Venezuela’s government and opposition are set to resume long-suspended talks on Tuesday that President Nicolas Maduro said would benefit the upcoming 2024 election, a move that could lead to Washington easing sanctions, multiple sources said.

Since 2019, the U.S. has sanctioned oil exports from Venezuela, a member of the Organization of Petroleum Exporting Countries (OPEC), to punish Maduro’s government following elections in 2018 that Washington considered a sham due to human rights violations.

Both oil benchmarks surged last week on fears the conflict in the Middle East could widen, with global benchmark Brent gaining 7.5 percent in its highest weekly gain since February.

READ:  Oil surges nearly 6% after Israel begins ground raids into Gaza

U.S. President Joe Biden will make a high-stakes visit to Israel on Wednesday as the country prepares to escalate an offensive against Hamas militants that has set off a humanitarian crisis in Gaza and raised fears of a broader conflict with Iran.

“The risks remain, with Iran’s foreign minister warning the possible expansion of the war on other fronts is approaching the inevitable stage,” ANZ Research said in a note on Tuesday.

The Biden administration has been seeking ways to increase the flow of oil to world markets to alleviate high prices. But any real oil output increase by Venezuela will take time due to lack of recent investments.