Oil prices extended losses in early Asian trade on Wednesday as President Trump claimed that Venezuela would be “turning over” between 30 and 50 million barrels of oil.
Markets are increasingly seeing the capture of Maduro and growing U.S. pressure on Venezuela as bearish for oil prices, with expectations that more Venezuelan oil will hit an already oversupplied oil market.
At the time of writing, West Texas Intermediate was trading at $56.32 a barrel, down 1.42%, while Brent crude had dropped 1.07% to trade just above $60.
If Trump’s claims are true, the barrels of crude he is likely referring to are those that have built up since the blockade of Venezuela began. Freeing up this storage space would ease the pressure on Venezuela to shut its wells.
While Venezuelan oil production is unlikely to rise in the near-term, an agreement between Venezuela and the U.S. on these barrels would remove the risk of more oil being shut in and increase the likelihood of sanctions being lifted.
By Charles Kennedy for Oilprice.com
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