Oil markets have been heavily influenced by the U.S. this week, first by news it was lifting sanctions on Venezuela, then by reports it would be refilling its SPR, and then early on Friday morning by news that a U.S. warship had intercepted missiles fired from Yemen. Volatility remains high in oil markets and both WTI and Brent are headed for another weekly gain, OilPrice said.
The US government has been one of the key oil market players this week, announcing both the easing of Venezuelan sanctions and a potential US SPR replenishment. While the first of those two announcements sent oil prices lower, news of the U.S. potentially refilling its oil reserves then sent prices spiking.
Venezuela gets 6-month sanctions clearance. The US government will temporarily lift some of the key sanctions targeting Venezuela’s oil industry, allowing Western companies to carry out transactions with PDVSA for six months in return for the Maduro regime’s pledges to hold fair elections. The energy minister of Trinidad and Tobago confirmed the US granted a license amendment allowing the island nation to jointly develop the offshore Dragon gas field in Venezuelan waters, with future production feeding Trinidad’s LNG terminal.
Meanwhile, the Israel-Gaza crisis continues to escalate, stoking fears that it may spread into a wider regional war, with the geopolitical risk premium adding further upside to prices. As of Friday morning, WTI was trading above the $90 per barrel mark and ICE Brent was nearing the $94 per barrel mark.
White House starts replenishing SPR. The US Department of Energy announced it would seek to buy 6 million barrels of crude oil for delivery to the Strategic Petroleum Reserve in December-January, adding that it seeks to sign purchase contracts at $79 per barrel or less.
US starts sanctions squeeze on Iran.The US Treasury Department issued a new set of sanctions against Iran, targeting 11 individuals and 8 companies involved in missile and drone production, refraining from slapping additional restrictions on Tehran’s oil sector.
Chesapeake eyes takeover of gas peer. US natural gas-focused producer Chesapeake reportedly reached out to its peer Southwestern Energy for a potential takeover for $12 billion including debt, a deal that could create the US’ largest gas producer by market value. Devon Energy joins the Exxon drive.Oklahoma-based shale producer Devon Energy is exploring major acquisition targets in the wake of the Exxon-Pioneer deal, with market rumors suggesting a move could be made towards Marathon Oil or privately held CrownRock.
European gas prices rise on war risks.Fears of a wider regional war in the Middle East are starting to weigh on natural gas markets, too, as benchmark TTF futures jumped to €52 per MWh ($17.5 per mmBtu) on the back of a deteriorating outlook for Egypt’s LNG exports into the winter.