• Oil prices edge lower after hitting an intraday peak above $100.
• Easing US sanctions on Venezuela helps reduce supply concerns.
• Middle East war and attacks on energy infrastructure keep upside risks elevated.

West Texas Intermediate (WTI) US Oil trades around $97.20 per barrel on Thursday, down 1.68% on the day after reaching an intraday high of $100.15, as markets balance improving supply conditions against escalating geopolitical risks.

Crude Oil prices pull back after the United States (US) partially eased sanctions on Venezuela, allowing companies to resume limited dealings with the country’s state-owned Oil firm. This move helps ease global supply concerns, further supported by the resumption of crude flows from Iraq’s Kirkuk fields to Turkey’s Ceyhan port.

At the same time, the White House announced a temporary waiver of the Jones Act, allowing foreign vessels to transport fuel between US ports for 60 days in an effort to improve domestic distribution and reduce logistical bottlenecks.

In parallel, the US Treasury signals that additional measures could be taken to boost supply, including potentially lifting restrictions on certain Iranian Oil volumes or tapping into strategic reserves, which also contributes to capping price gains.

However, geopolitical risks continue to support a bullish bias. Tensions in the Middle East intensify following Israeli strikes on Iran’s South Pars gas field, followed by Iranian retaliation targeting energy infrastructure in Qatar. Attacks have also been reported on facilities in Saudi Arabia and the United Arab Emirates (UAE), raising fears of significant disruptions to global energy supply.

A joint statement from the United Kingdom (UK), France, Germany, Italy, the Netherlands and Japan also emphasises the major economies’ commitment to stabilising energy markets. The signatories state that they are prepared to work with certain producer countries to increase supply and ensure the security of transit through the Strait of Hormuz, whilst calling on Iran to immediately cease its threats and attacks against energy infrastructure and maritime transport.

According to Rabobank, this environment creates structural risks for energy markets, with potential damage to key infrastructure and the threat of lasting supply reductions. The bank also highlights the risk of further market fragmentation, particularly if the US were to impose restrictions on Oil exports.

In this context, despite bearish supply-side developments, the geopolitical risk premium remains elevated, limiting downside pressure on WTI and keeping prices near key psychological levels.