Oil prices rose on Monday (December 22nd) after the U.S. Coast Guard attempted to intercept an oil tanker in international waters near Venezuela the day before, and Ukraine damaged two ships and a dock in Russia, raising the risk of oil supply disruptions.

Brent crude rose $1.60, or 2.7%, to $62.07 a barrel, while U.S. West Texas Intermediate crude rose $1.49, or 2.6%, to $58.01 a barrel.

The U.S. Coast Guard attempted to intercept an oil tanker on Sunday that U.S. officials said was part of an illegal Venezuelan sanctions-evasion operation, the third such operation this month. The pursuit followed U.S. President Donald Trump's announcement last week of a blockade of sanctioned oil tankers entering and leaving Venezuela.

Market participants are seeing the risk of disruption to Venezuelan oil exports due to the U.S. embargo, having previously downplayed the risk, said UBS analyst Giovanni Staunovo.

Venezuelan crude accounts for 1% of global supply, and most of it is purchased by China. Beijing said on Monday that the US seizure of another country's vessels constitutes a serious violation of international law, after the US intercepted a China-bound oil tanker off the coast of Venezuela on Saturday.

BLACK SEA KEY TO RUSSIA'S ENERGY EXPORTS

Oil prices also rose following reports of Ukrainian drone attacks on Russian vessels at Black Sea ports, oil trading advisory firm Ritterbusch and Associates said in a note.

The Ukrainian drone attacks damaged two vessels, two docks, and sparked a fire in a village on the Black Sea coast of Russia's Krasnodar region, regional authorities said on Monday. The Black Sea region is crucial for Russian energy exports.

"We expect further consolidation this week amid declining holiday volumes and the ongoing standoff between deteriorating oil fundamentals and the need to maintain some geopolitical risk premiums related to Ukraine/Russia and Venezuela," Ritterbusch and Associates said.

US special envoy Steve Witkoff said on Sunday that talks between US, European, and Ukrainian officials in Florida over the past three days to end Russia's war in Ukraine have focused on aligning positions. Those meetings and separate talks with Russian negotiators have been productive, he said.

However, Russian President Vladimir Putin's top foreign policy aide said the changes made by Europe and Ukraine to the US proposal have not improved the prospects for peace. (alg)

Source: Reuters.com