Oil steadies as traders weigh latest US moves

Oil prices steadied on Tuesday after sliding more than $1 on Monday on bets the US would ease sanctions on producer Venezuela and stepped up efforts to prevent an escalation of the war between Israel and Hamas.

Brent crude futures were up 29c at $89.94 a barrel, while West Texas Intermediate was 20c higher at $86.86 at 8.08am GMT.

Venezuela’s government and opposition are set to resume long-suspended talks on Tuesday, which President Nicolas Maduro said would benefit the 2024 election, a move that could lead to Washington easing sanctions, multiple sources said.

Since 2019, the US has sanctioned oil exports from Venezuela, a member of Opec, to punish Maduro’s government after elections in 2018 that Washington considered a sham due to human rights violations.

The US government has been seeking ways to increase the flow of oil to world markets to alleviate high prices. But any real oil output increase by Venezuela will take time due to a lack of recent investments.

Both oil benchmarks surged last week on fears the conflict in the Middle East could widen, with Brent gaining 7.5% in its highest weekly gain since February.

US President Joe Biden will visit Israel on Wednesday as the country prepares to escalate an offensive against Hamas militants that has set off a humanitarian crisis in Gaza and raised fears of a broader conflict with Iran.

Biden’s trip is a balancing act. While showing support for Israel’s war on Hamas, Washington is also trying to rally Arab states to help head off a wider regional war, after Iran pledged “pre-emptive action” from the “resistance front” of its allies that include the Hezbollah movement in Lebanon.

“The risks remain, with Iran’s foreign minister warning the possible expansion of the war on other fronts is approaching the inevitable stage,” ANZ Research said in a note on Tuesday.

Reuters