Oil prices have extended their losses after US President Donald Trump announced that Venezuela would turn over millions of barrels of oil to the United States. The news came as a surprise, causing crude prices to sink by as much as two percent on Tuesday and around one percent on Wednesday. According to Trump, the interim authorities in Venezuela will hand over between 30 and 50 million barrels of high-quality, sanctioned oil to the US, which will be sold at market price and controlled by the US president to benefit both Venezuela and the US.
The development has eased supply concerns, as analysts noted that the shipments reduce the risk of Caracas having to cut output due to limited storage capacity. However, the outlook for the commodity remains lower prices, given that the crude market is well-stocked after OPEC+ agreed to boost output. Venezuela, which sits on about a fifth of the world’s oil reserves, faces several challenges in ramping up output, including its creaking infrastructure, low prices, and political uncertainty.
Meanwhile, equity markets have fluctuated after a strong start to the year, with Seoul following London and New York in hitting record highs, thanks to the relentless rush into artificial intelligence. South Korea’s Kospi index continued its run-up, while Sydney, Singapore, Shanghai, Wellington, and Jakarta also rose. However, Hong Kong dipped along with Taipei and Manila, while Tokyo slid after China imposed tougher export controls on products sent to Japan with potential military uses.
Despite rising geopolitical tensions, analysts remain upbeat about the outlook for equities this year, citing expectations of robust economic growth and earnings growth. Michael Brown at Pepperstone noted that the “path of least resistance” continues to lead to the upside, and that any dips represent buying opportunities.
As of 0230 GMT, key figures showed West Texas Intermediate down 1.2 percent at $56.47 per barrel, while Brent North Sea Crude was down 1.0 percent at $60.10 per barrel. The Tokyo Nikkei 225 was down 0.5 percent, while the Hong Kong Hang Seng Index was down 1.0 percent. The euro was up against the dollar, trading at $1.1700, while the pound was up at $1.3511.
The developments in the oil and equity markets are being closely watched, as they have significant implications for the global economy. With the US-Venezuela oil deal and the ongoing geopolitical tensions, investors are advised to stay vigilant and monitor market movements closely. The next steps will be crucial in determining the direction of the markets, and all eyes will be on the key players involved.
