Oil prices mixed as Russia-Ukraine truce offsets Venezuela supply worries

By Nicole Jao

NEW YORK (Reuters) -Oil prices diverged on Tuesday as a maritime and energy truce between Russia and Ukraine offset concerns about tighter global supply due to threatened U.S. tariffs on countries buying Venezuelan production.

Brent crude futures settled 2 cents higher, or 0.03%, at $73.02 a barrel. U.S. West Texas Intermediate crude fell 11 cents, or 0.16%, to $69.

The United States reached deals with Ukraine and Russia to pause attacks at sea and against energy targets, with Washington agreeing to push to lift some sanctions against Moscow.

Kyiv and Moscow both said they would rely on Washington to enforce the deals, while expressing scepticism that the other side would abide by them.

"If there's a ceasefire between Russia and Ukraine, it might open the door for the reduction of sanctions on Russian oil," said Phil Flynn, senior analyst with Price Futures Group.

Trump's threat of tariffs against countries importing oil and gas from Venezuela has raised supply concerns, and both benchmarks rose more than 1% on Monday following the announcement.

"These secondary tariffs are an indirect sanction to degrade Venezuela's oil supply capability and hurt China's teapot refining system," said Mukesh Sahdev, Rystad Energy's global head of commodity markets, referring to China's small, independent refineries.

Oil is Venezuela's main export. China, already a target of U.S. import tariffs, is its largest buyer.

The Trump administration also on Monday extended a deadline to May 27 for U.S. producer Chevron to wind down operations in Venezuela.

The withdrawal of Chevron's licence to operate could reduce production in the country by about 200,000 barrels per day, according to ANZ analysts.

Last week, the U.S. issued new sanctions intended to hit Iranian oil exports.

OPEC+, the Organization of the Petroleum Exporting Countries and allies including Russia, will likely stick to its plan to raise oil output for a second consecutive month in May, four sources told Reuters, amid steady oil prices and plans to force some members to reduce pumping to compensate for past overproduction.

Executives from commodity trading houses said they expect a well-supplied oil market this year, with concerns remaining over global demand growth, Reuters reported.

(Additional reporting by Ahmad Ghaddar in London, Yuka Obayashi in Tokyo and Siyi Liu in Singapore; Editing by Louise Heavens, Kirsten Donovan, Joe Bavier, David Gregorio and Rod Nickel)