By Arathy Somasekhar
HOUSTON (Reuters) -Oil prices gained 1% on Monday as U.S. President Donald Trump said he’ll impose a 25% tariff on countries that buy oil and gas from Venezuela.
Price gains were capped, nonetheless, because the U.S. gave oil producer Chevron until May 27 to wind down its oil operations and exports from Venezuela. Trump had initially given Chevron 30 days from March 4 to wind down that license.
The 2 moves taken together alleviate some pressure on Chevron while putting more pressure on other consumers of Venezuelan oil, though it’s uncertain how the Trump administration will implement the tariff.
Brent crude futures rose 84 cents, or 1.2%, to $73 a barrel, while U.S. West Texas Intermediate crude was up 83 cents, or 1.2%, at $69.11.
Also keeping a ceiling on prices, OPEC+’ will likely proceed with a planned May oil output hike, sources said, while talks continued to finish the war in Ukraine, which could increase supply of Russian crude to global markets.
“We have somewhat little bit of a supply shock of Venezuela losing barrels to the world market. In order that’s definitely a bullish force,” said Dennis Kissler, senior vice chairman of trading at BOK Financial, adding that investors were looking forward to tighter restrictions on Iran as well.
The U.S. on Thursday issued latest sanctions intended to hit Iranian oil exports, including what the State Department said were the primary U.S. measures targeting a Chinese “teapot refinery” processing the crude.
Each benchmarks settled higher on Friday and recorded a second consecutive weekly gain. Wall Street also surged on Monday after signs the Trump administration is taking a measured approach on tariffs against its trading partners.
Trump signalled on Friday that there will likely be flexibility on tariffs and that his top trade chief plans to talk together with his Chinese counterpart. He said on Monday he’ll within the very near future announce tariffs on automobiles, aluminium and pharmaceuticals.
He also urged the Federal Reserve to lower rates of interest after the U.S. central bank last week kept them unchanged. Lower rates decrease the prices of borrowing, and may boost economic activity and demand for oil.
Atlanta Federal Reserve President Raphael Bostic said he anticipates slower progress on inflation in coming months and because of this now sees the Fed cutting its benchmark rate of interest only 1 / 4 of a percentage point by the top of this yr.
U.S. and Russian officials were in Saudi Arabia on Monday for talks over a broad ceasefire in Ukraine, with Washington also targeting a separate Black Sea maritime ceasefire deal while a wider agreement is thrashed out.