Oil Prices Rise Amid Trade Deal Optimism, Despite Venezuelan Supply Concerns

Oil prices edged higher on Friday as renewed optimism over global trade negotiations lifted expectations for economic growth and fuel demand, countering concerns about an expected rise in Venezuelan crude supply.

Brent crude futures reached a one-week high, trading up 20 cents, or 0.29%, at $69.38 a barrel as of 8:19 a.m. Saudi time. U.S. West Texas Intermediate (WTI) crude futures also gained 20 cents, or 0.30%, to reach $66.23.

Market sentiment was buoyed by progress in trade talks between the United States and several of its key partners. Following the announcement of a U.S.-Japan trade agreement earlier this week, European Union diplomats indicated that the EU is moving closer to a deal with the U.S. that could see a 15% baseline tariff on imports, with possible sectoral exemptions.

“Trade talk optimism appears to be offsetting expectations for stronger Venezuelan supply,” analysts at ING noted in a client briefing.

The optimism on trade comes despite reports suggesting that the U.S. is preparing to ease some restrictions on Venezuelan oil operations. Sources said on Thursday that Washington may allow certain partners of Venezuela’s state-owned oil company PDVSA — including U.S. oil giant Chevron — to resume limited operations in the sanctioned country.

If these sanctions are relaxed, Venezuelan oil exports could rise by over 200,000 barrels per day. While this would add to global supply, analysts believe the impact could be limited and would primarily benefit U.S. refiners dealing with a shortage of heavier crude.

Despite this potential supply increase, Brent crude has gained 0.4% so far this week, while WTI has dropped by 1.4%. Both benchmarks climbed around 1% on Thursday, bolstered by reports of reduced Russian gasoline exports and temporary disruptions to crude shipments from Kazakhstan and Azerbaijan.

The market was also supported by U.S. Energy Information Administration data showing a sharper-than-expected decline in crude stockpiles. U.S. crude inventories fell by 3.2 million barrels last week to 419 million barrels — double the 1.6 million barrel draw forecast by analysts in a Reuters poll.

“I am encouraged by the way crude oil held and bounced away from its support band this week, which keeps hopes intact of a rebound back toward $70,” said Tony Sycamore, an analyst at IG.

Traders will now be watching closely for economic data next week from major oil-consuming nations, including factory activity figures from China and U.S. indicators on inflation, employment, and inventories — all of which could influence oil demand outlooks in the coming months.