Oil prices erased earlier gains after the United States seized a sanctioned tanker off Venezuela, following broad losses in stocks and other high-risk assets.
Brent crude held above $62 a barrel, paring earlier gains of up to 0.7%. West Texas Intermediate crude traded below $59. Disappointing corporate earnings outweighed the impact of heightened risks stemming from escalating tensions between Washington and Caracas.
US forces intercepted and boarded the giant oil tanker in a dangerous escalation of tensions with Caracas, with the Venezuelan government describing the move as an act of piracy.
Venezuela has the world's largest oil reserves and exported about 586,000 barrels per day last month. Most of that went to China, although some of Chevron Corp.'s production from the OPEC member country goes to the United States. The company said its operations are continuing as normal.
Ukraine escalates attacks on Russian targets
Meanwhile, Ukraine attacked a tanker belonging to the shadow fleet linked to Russia's oil trade, as the United States presses for a ceasefire between the two sides. This latest incident means that since the end of last month, there have been at least five attacks on ships with ties to Russia.
The rising geopolitical tensions come at a time when crude oil prices are under pressure, as increased production from OPEC+ and the Americas is expected to outstrip demand growth, potentially leading to a glut.
Monthly reports from OPEC and the International Energy Agency are due later on Thursday, which may provide further insights into the supply and demand situation.
Geopolitical tensions are supporting prices
Robert Rennie, head of commodities and carbon research at Westpac Banking, said that the US seizure of a sanctioned vessel off Venezuela and Ukraine's attack on another ship from Russia's shadow fleet in the Black Sea should add further to the sanctions and war risk premium in the near term.
He added that the huge growing glut will put pressure on prices in 2026, and that Brent crude may remain in the current range of $60 to $65 a barrel for the time being.
Meanwhile, U.S. crude oil inventories fell by 1.8 million barrels last week, according to government data. Inventories at Cushing, Oklahoma, rose after four weeks of declines, but levels at the West Texas Intermediate (WTI) crude delivery point remain the lowest for this time of year since 2007.
In the latest trading, Brent crude for February settlement was little changed at $62.18 a barrel by 12:17 pm Singapore time, while West Texas Intermediate crude for January delivery was steady at $58.46 a barrel.
