Oil prices rose as President Donald Trump tightened the blockade on Venezuela, with US forces boarding one tanker and pursuing another within weeks of capturing a vessel.

West Texas Intermediate oil traded as high as $58 per barrel on Monday after two weeks of declines. The US Coast Guard boarded the tanker Centuries in the Caribbean on Saturday, carrying about 2 million barrels of Venezuelan crude. It was the first non-sanctioned vessel to be targeted. US forces are also pursuing the Bella 1, which was en route to Venezuela.

Washington has been increasing pressure on the government of Nicolás Maduro, with Trump aiming to cut off its main revenue stream. The US has designated the regime as a foreign terrorist organization, accusing it of involvement in drug trafficking. Venezuela has rejected the accusations, saying the US is pursuing its natural resources.

Venezuela still holds the world's largest crude oil reserves, but its exports, mostly to China, now account for less than 1% of global demand.

There are also increased supply risks from other members of the OPEC+ producer group after Ukraine attacked an oil tanker belonging to a shadow Russian fleet in the Mediterranean Sea with drones for the first time. This followed attacks on Lukoil PJSC facilities in the Caspian Sea.

Geopolitics has helped stabilize oil prices, which have fallen by about a fifth this year. The decline was driven by oversupply as both OPEC+ and its competitors increased production as demand growth slowed.

Military activity near Venezuela should not significantly alter surplus expectations, said Bob McNally, president of Rapidan Energy Group.

"We have been telling clients for some time to expect a downward trend in crude prices driven by a large, growing surplus, punctuated by brief spikes driven by geopolitical headlines, as has been the case since June," McNally said. "But we don't expect these to significantly disrupt oil production and flows. So, after triggering a $1-$2 short-covering rally (the Israel-Iran one was much larger), prices should continue to decline."

Trend-following commodity advisors remain 100% short on both Brent and WTI, according to data from Bridgeton Research Group, which was recently acquired by Kpler.

WTI for February delivery rose 2.0% to $57.64 per barrel at 11:09 a.m. in New York. Brent for February settlement rose 2.0% to $61.66 per barrel. (alg)

Source: Bloomberg