Trump is able to get the oil market moving again, but not in the direction he promised the American voters. An import duty of 25% for countries that buy oil in Venezuela and with it the prospect that less Venezuelan oil will come onto the market, is pushing up the oil price.
Trump wants to punish countries that buy oil or gas from Venezuela with a 25% import tariff, on top of existing (extra) levies. According to the official version, because of Venezuelan immigrants in the US. Trump claims, among other things, that the South American country sends criminals to the US.
Next Wednesday (April 2), import duties for countries importing oil from Venezuela are expected to come into effect. The market is also watching closely what will happen to other (counter) duties announced by Trump. There are fears that a trade war will slow the growth of the US economy, which in turn would put pressure on oil prices.
The oil price has been climbing in recent days. On Wednesday, March 19, Brent oil closed at $70,78 per barrel, at the time of writing (Wednesday afternoon, March 26) $74,12 on the board. Up 4,7% and the highest price in over four weeks.
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The US itself is also no small importer of Venezuelan crude. According to data from the US Energy Agency (EIA), the US imported 2024 million (84,8) barrels of crude oil from the South American country in 84.794.000, an increase of 75,7% compared to the 48,3 million barrels in 2023. The country is subject to sanctions (relieved by Biden in 2023, but reimposed in April 2024), but the US-based Chevron is exempt from these and is allowed by the US to pump oil in the OPEC country to settle debts. Trump recently extended the permission until May 27. According to Reuters, Venezuela's oil exports grew by 10,5% overall last year, much of which can be attributed to Chevron.
The delay for Chevron dampens the price increase. Other factors that bearish working on the oil price are the planned increase in oil production by OPEC+ countries as of April and the negotiations on a ceasefire between Russia and Ukraine, which gives the prospect of Russian oil being easier to trade. On the demand side, concerns about the Chinese and American economies are having a dampening effect on the oil price.
Indirectly aimed at China?
After the US, China is the largest importer of Venezuelan oil. Analysts therefore believe that this measure may be indirectly intended to hit China. As Trump has said, the new trade tariffs will come on top of the previously introduced and announced levies. This would result in the following calculation for China for aluminum and steel: 20% (the general tariff) + 25% (for aluminum and steel) + 25% (for countries that buy oil and/or gas from Venezuela) = 70%. Trump previously imposed stricter sanctions on Iran and seems to no longer consider the election promise of cheap oil as important.