Brent crude futures opted for an upward trajectory yesterday, successfully breaching a downward resistance line that had persisted since mid-January.
This breakthrough creates potential for further movement toward the next target range of 74.10 – 74.27 per barrel. The upward momentum in crude oil was supported by a recent policy shift from the U.S. -now employing not only secondary sanctions but also secondary tariffs.
According to the new directive, effective April 2nd, the U.S. State Department will have the authority to impose an additional 25% tariff on all goods imported into the U.S. from any country that purchases Venezuelan oil, whether directly or through intermediaries. Venezuela currently produces approximately 875,000 barrels of oil per day, with China purchasing around 500,000 barrels daily.
Consequently, the secondary tariff measures primarily impact China. Should the escalation of secondary sanctions and tariffs prove effective, it may disrupt flows of sanctioned oil, providing a notable boost to the oil market – which otherwise faces the risk of a supply surplus this year.
Additionally, it is worth noting that last week, the U.S. imposed sanctions for the first time on a Chinese refinery and a terminal, both identified as purchasers of Iranian oil from a sanctioned vessel.