The oil prices surged on Friday as the U.S. increased economic strain on Venezuelan oil shipments and conducted airstrikes against Islamic State militants in Nigeria’s Sokoto state, in coordination with the African country’s authorities.
Brent crude futures increased 5 cents, or 0.1 percent, to $62.29 per barrel by 0606 GMT. U.S. West Texas Intermediate (WTI) crude was up 6 cents at $58.41.
Venezuela and Nigeria are both significant producers of oil. Although the oilfields of Nigeria are found mainly in the southern part of the country, the airstrikes in the northwest of the country contributed to the geopolitical risks.
The White House instructed its military units to target a “quarantine” of Venezuelan oil at least within the next two months, indicating Washington is now more preoccupied with wielding economic as opposed to military pressure on Caracas.
An analyst at Galaxy Futures, Tong Chuan, said that “Due to the Christmas holiday closure, year-end market activity remained relatively subdued. Supply-side disruptions have become the primary driver of oil prices.”
Instead, oil prices are heading towards their most significant annual fall since 2020, as investors balance U.S. economic expansion and the risk of supply disruptions such as in Venezuela.
The Brent and WTI prices are projected to fall by approximately 16 and 18 percent, respectively, this year, their highest since the pandemic struck oil demand, as the supply will be greater than the demand next year.
Two market sources reported on Wednesday that the oil shipments of Kazakhstan on the Caspian Pipeline will reduce by a third by December to their lowest since October 2024, after a Ukrainian drone strike damaged infrastructure at the flagship CPC export terminal.
Official inventory data is scheduled to be released by the U.S. Energy Information Administration on Monday, again later than normal due to the Christmas holiday. The data ought to provide an image of demand on the largest oil consumer in the world.
