WASHINGTON (dpa-AFX) - Crude oil catapulted on Monday as the conflict between the U.S. and Venezuela escalates to the next level. In Europe, Russia and Ukraine engaged in heavy strikes with no end to the war in sight despite hectic U.S. mediation.
WTI Crude Oil for February delivery was last seen trading up by $1.43 (or 2.53%) at $57.95 per barrel.
On the geopolitical front, after U.S. President Donald Trump ordered a 'naval blockade' on December 16 on all oil tankers that enter and exit Venezuela, the U.S. seized two vessels, thereby escalating the tensions.
The Trump administration has designated Venezuelan President Nicolas Maduro as an ally of foreign terrorists and accused Maduro of promoting narco-trafficking that has caused an opioid crisis in the U.S.
Meanwhile, China condemned the U.S. moves, stating that they are in violation of international law. Of note, most of the crude oil from Venezuela is shipped via 'shadow-fleet tankers' to China.
The U.S. is now reportedly moving to intercept and seize another oil tanker (marking the third seizure) in international waters near Venezuela, which the U.S. has alleged is part of a 'dark fleet.'
The U.S. pressure on Venezuela jacked up oil prices today.
In Europe, over the weekend, an Ukrainian drone destroyed two vessels and two piers in Russia's Krasnodar region on the Black Sea coast.
Separately, the weekend meeting in Miami, Florida between U.S. envoy Steve Witkoff and Ukrainian official Rustem Umerov ended with no breakthrough news on a ceasefire.
However, the duo issued a joint statement calling the negotiations as 'productive and constructive' without revealing further details on the progress.
Later Witkoff also announced that the U.S. had 'productive' talks with Russian envoy Kirill Dmitriev.
Russia is losing billions of petrodollar revenue due to sanctions by the U.S. and the West on its oil exports. Earlier proposals by the Trump administration to end the drawn out war failed to yield a significant result as Russia and Ukraine disagreed on territorial concessions.
Last Friday, the Baker Hughes count for U.S. crude oil rigs revealed that the numbers decreased to 406 in the week ended December 19 from 414 in the previous week and total rigs decreased to 542 in the week ended December 19 from 548 in the previous week.
In its upwardly revised Short-Term Energy Outlook, the U.S. Energy Information Administration estimates that the OPEC alliance's effective production capacity was higher by about 220,000 barrels per day in 2024, 370,000 bpd in 2025, and 310,000 bpd in 2026 compared with its earlier assessments.
The revision stems from a change in the EIA's strategy for assessing supply risk, i.e., from 'maximum sustainable capacity' to 'effective production capacity.'
Today, the Federal Reserve Bank of Chicago released the Chicago Fed National Activity Index showing a rise to -0.21 in September from -0.31 in August indicating mild contraction in economic activity. Despite the increase, the index is in the negative territory for the sixth consecutive month.
In the U.S., Cleveland Fed President Beth Hammack has advocated that interest rates should stay unchanged as risks of inflation outweigh labor market concerns.
In a Bloomberg TV interview, Fed Governor Stephen Miran warned that the U.S. may risk entering a recession if the Fed does not lower the interest rates, although he ruled out any potential near-term danger.
Despite divergent views from Fed governors and the cautious note from Fed Chair Jerome Powell to traders asking not to assume further rate cuts a certainty, investors are still pricing in a few more rate cuts in the upcoming new year.
The U.S. dollar index was last seen trading at 98.32, down by 0.27 (or 0.27%) today.
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