Oil Steadies on Hopes US Will Ease Sanctions on Venezuela

Oil prices steadied on Tuesday after sliding more than US$1 on Monday amid hopes the US would ease sanctions on producer Venezuela and as Washington stepped up efforts to prevent an escalation of the war between Israel and Hamas. Brent crude futures were up 29 cents at US$89.94 a barrel, while US West Texas Intermediate crude (WTI) was up 20 cents at US$86.86 a barrel as of 0808 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 the Organization of Petroleum Exporting Countries (OPEC), to punish Maduro's government following 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 lack of recent investments.

Both oil benchmarks surged last week on fears the conflict in the Middle East could widen, with global benchmark Brent gaining 7.5% in its highest weekly gain since February. US President Joe Biden will make a high-stakes visit to 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, however, is a balancing act.

Although 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 "preemptive action" from the "resistance front" of its allies which 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.