Crude oil futures traded flat on Tuesday morning, despite the US threatening a 25 per cent tariff on US imports from countries buying oil from Venezuela. This tariff would come into effect on April 2.
At 9.56 am on Tuesday, June Brent oil futures were at $72.38, up by 0.01 per cent, and May crude oil futures on WTI (West Texas Intermediate) were at $69.12, up by 0.01 per cent. April crude oil futures were trading at ₹5,945 on Multi Commodity Exchange (MCX) during the initial hour of trading on Tuesday against the previous close of ₹5,931, up by 0.24 per cent, and May futures were trading at ₹5,934 against the previous close of ₹5,917, up by 0.29 per cent.
In a post on the social media platform Truth Social, the US President Donald Trump said the US will be putting what is known as a Secondary Tariff on Venezuela, for numerous reasons. Any country that purchases oil/gas from Venezuela will be forced to pay a tariff of 25 per cent to the US on any trade they do with the US. All documentation will be signed and registered, and the tariff will take place on April 2, he said in the post.
In their Commodities Feed for Tuesday, Warren Patterson, Head of Commodities Strategy of ING Think, and Ewa Manthey, Commodities Strategist, said oil prices rose on Monday after Trump announced 25 per cent US tariffs on any country buying Venezuelan oil. The news helped ICE Brent break above $73 a barrel, settling at its highest since late February. Oil, along with broader risk assets, also benefited from suggestions the Trump administration may take a more targeted approach with reciprocal tariffs, they said.
In recent years, Venezuela increased oil production and exports as the Biden administration eased sanctions, providing a waiver to Chevron to operate in the country. Venezuela produced 918,000 barrels a day of crude oil in February, up from 760,000 barrels a day in 2023, while it exports around 750,000 barrels a day. As such, this move could mean a fairly sizeable tightening in the global oil balance, they said.
“The largest buyers of Venezuelan crude oil are China, the US and India. However, the volumes to the US should stop as Chevron’s sanction waiver to operate in Venezuela expires on May 27. Also, tariffs will start on April 2, the same day broader reciprocal levies may be introduced. This should be supportive for heavier crude oil grades, of which Venezuela is a key exporter,” they said in the commodities feed.
Meanwhile, a Reuters report said the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, will likely stick to its plan to raise oil output for a second consecutive month in May, amid steady oil prices and plans to force some members to reduce pumping to compensate for past overproduction.
March zinc futures were trading at ₹275.75 on MCX during the initial hour of trading on Tuesday against the previous close of ₹274.75, up by 0.36 per cent.
On the National Commodities and Derivatives Exchange (NCDEX), April jeera contracts were trading at ₹22,215 in the initial hour of trading on Tuesday against the previous close of ₹22,085, up by 0.59 per cent.
April castorseed futures were trading at ₹6,325 on NCDEX in the initial hour of trading on Tuesday against the previous close of ₹6,339, down by 0.22 per cent.