Key Points
- Brent crude rose toward $62 after the U.S. tightened its blockade on Venezuela.
- The U.S. Coast Guard boarded a tanker carrying 2 million barrels of oil.
- President Trump aims to bankrupt the Maduro government by stopping oil exports.
- Conflict and blockades are stopping oil prices from falling further this year.
Oil prices climbed on Monday as President Trump ramped up a military blockade against Venezuela. Brent crude moved toward $62 a barrel, reversing a two-week downward trend. This jump comes after the U.S. Coast Guard took aggressive action in the Caribbean, boarding a massive tanker, the Centuries, on Saturday.
The ship was carrying roughly 2 million barrels of Venezuelan oil. U.S. forces are also currently chasing a second vessel, the Bella 1, which was heading toward the South American nation.
These moves are part of a broader plan by the Trump administration to cut off funding to Nicolás Maduro’s government. Washington recently labeled the regime a foreign terrorist organization and accused its leaders of drug trafficking. By stopping these tankers, the U.S. hopes to choke off the country’s main source of income.
Even though Venezuela holds the world’s largest oil reserves, its exports have shriveled. Today, they make up less than 1% of the world’s total oil supply, with most of that oil going to China.
Tensions are also rising on the other side of the world. For the first time, Ukraine used drones to strike a tanker from Russia’s “shadow fleet” in the Mediterranean Sea. Ukraine also targeted Lukoil-owned oil facilities in the Caspian Sea. These attacks on Russian energy infrastructure have added a new layer of risk to global shipping lanes, raising concerns among investors about future supply.
Before these events, oil prices had been struggling. They dropped by about 20% this year because there was simply too much oil on the market and not enough demand from big economies. However, the combination of U.S. blockades and drone strikes is now putting a “floor” under those prices.
While the world still has plenty of oil for now, the threat of military conflict and seized ships is forcing prices back up. Traders are now watching to see whether these blockades will expand or if more tankers will come under the U.S. military’s crosshairs.
