LONDON, United Kingdom: Oil prices extended losses today after President Donald Trump said Venezuela would turn over millions of barrels to the United States, while equities wavered after a record-breaking start to the year.
Frankfurt was a rare riser, hitting a record high above 25,000 points, while London fell and Paris was flat.
Lower oil prices dragged on British heavyweights BP and Shell, which were both down more than three percent.
Crude has seen wild swings since Trump ordered the toppling of Nicolas Maduro, his counterpart in Caracas on Saturday, and said Washington would run the country while demanding “total access” to its oil.
But both main oil contracts dropped today, having already lost ground Tuesday, after Trump announced the latest development.
“The Interim Authorities in Venezuela will be turning over between 30 and 50 MILLION Barrels of High Quality, Sanctioned Oil, to the United States of America,” he wrote on his Truth Social platform.
“This oil will be sold at its market price, and that money will be controlled by me, as President of the United States of America, to ensure it is used to benefit the people of Venezuela and the United States.”
Analysts said the shipments lowered the risk that Caracas would have to cut output owing to its limited storage capacity, easing supply concerns
But they added that the outlook for the commodity pointed to lower prices, as the market remains well stocked after OPEC+ agreed to boost output.
Venezuela sits on about a fifth of the world’s oil reserves, but observers pointed out that a quick ramp-up of output would be hamstrung by several issues including its creaking infrastructure, low prices and political uncertainty.
“Today’s move lower is a sign that the oil price continues to be sensitive to any shift in supply dynamics,” said Kathleen Brooks, research director at the trading group XTB.
Equity markets fluctuated after a strong start to the year that has already seen Seoul follow London and New York in hitting record highs thanks to the relentless rush into all things artificial intelligence.
Shanghai also edged up, while Hong Kong closed lower and Tokyo shed more than one per cent after China imposed tougher export controls on products sent to Japan with potential military uses.
Still, despite rising geopolitical tensions, analysts remain upbeat about the outlook for equities this year.
“Participants remained squarely focused on what remains a robust bull case of resilient economic growth and robust earnings growth, largely in keeping with that which powered the market higher last year,” wrote Michael Brown, senior research strategist at Pepperstone.
He pointed to “expectations for considerably looser monetary and fiscal backdrops through the next twelve months”. – AFP
