Oil falls after Trump says Venezuela will supply to US

By Stephanie Kelly

LONDON, Jan 7 (Reuters) - Oil prices fell connected Wednesday aft President Donald Trump said the United States had reached a woody to import up to $2 cardinal ​worth of Venezuelan crude, a determination that is expected to summation supplies to the ‌world's largest lipid consumer.

Brent crude futures fell 35 cents, oregon 0.6%, to $60.35 a tube by 0928 GMT, portion U.S. West ‌Texas Intermediate crude fell 52 cents, oregon 0.9%, to $56.61 a barrel.

Both benchmarks extended declines of much than $1 from the erstwhile trading session, arsenic marketplace participants expected ample planetary proviso this year.

The woody betwixt Washington and Caracas could initially necessitate cargoes that were bound for China to beryllium rerouted, sources told Reuters. ⁠Venezuela has millions of barrels of ‌oil loaded connected tankers and successful retention tanks that it has been incapable to vessel since mid-December owed to a blockade connected exports imposed by Trump.

The ‍blockade was portion of a U.S. unit run against Venezuelan President Nicolas Maduro's authorities that culminated successful U.S. forces capturing him implicit the weekend. Top Venezuelan officials person called Maduro's seizure a kidnapping and accused the ​U.S. of trying to bargain the country's immense lipid reserves.

Venezuela volition beryllium "turning over" betwixt 30 cardinal ‌and 50 cardinal barrels of "sanctioned oil" to the U.S., Trump wrote successful a societal media station connected Tuesday.

"The Trump station connected Venezuelan lipid imports enactment downward unit connected crude prices earlier today, but marketplace participants look to judge present that those volumes could beryllium smaller, with lipid prices paring earlier losses," said UBS expert Giovanni Staunovo.

Morgan Stanley analysts estimated the lipid marketplace could scope a ⁠surplus of arsenic galore arsenic 3 cardinal barrels per time ​in the archetypal fractional of 2026, based connected anemic ​growth successful request past twelvemonth and rising proviso from OPEC and non-OPEC producers.

However, the imaginable of higher, cheaply extracted Venezuelan lipid exports could intermission enlargement of productive ‍capacity successful the U.S. and ⁠elsewhere, analysts astatine BMI, a portion of Fitch Solutions, said successful a enactment connected Wednesday.

Venezuela has been selling its flagship crude grade, Merey, astatine astir $22 per tube beneath Brent ⁠for transportation astatine its ports.

"That raises the expected terms of lipid implicit the mean term, particularly if the Venezuelan authorities ‌survives," the BMI analysts said.

(Reporting by Stephanie Kelly, Sam Li, Florence Tan and Sudarshan ‌Varadhan; Editing by Kirsten Donovan and Joe Bavier)