Morning Highlights: Oil steady as trade optimism offsets Venezuela supply outlook

Friday, July 25, 2025

Oil prices were broadly stable on Friday, as hopes for new trade agreements between the U.S. and its partners supported sentiment and offset concerns about a potential rise in Venezuelan crude supply, leaving the market in a familiar holding pattern.

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Market snapshot (as of 6:15EST):

• Brent (Sep): $69.35 (▲$0.17 / +0.25%)

• WTI (Aug): $66.19 (▲$0.16 / +0.24%)

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Brent locked in range amid mixed catalysts

Brent crude has traded between $67 and $70 per barrel for nearly a month, following a steep drop in late June after a ceasefire between Iran and Israel calmed geopolitical tensions. Since then, markets have been driven largely by macroeconomic cues, with oil-specific fundamentals offering limited direction.

“Oil prices are caught in a holding pattern brought about by inconclusive specific oil drivers,” said PVM Oil’s John Evans.

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Trade progress helps shore up sentiment

Oil and broader financial markets were supported by renewed optimism on trade talks:

• The U.S. and Japan finalized a deal on Wednesday, establishing a 15% baseline tariff with potential exemptions.

• Two European diplomats told Reuters that U.S.-EU talks are progressing, potentially avoiding the steep tariff hikes slated to begin August 1.

“Trade talk optimism appears to be offsetting expectations for stronger Venezuelan supply,” ING analysts noted in a Friday briefing.

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Venezuelan oil: Return on the radar

News that the U.S. is preparing to allow limited operations for companies working with Venezuela’s state-run PDVSA, including Chevron, drew attention this week. If approved, this could increase Venezuela’s exports by 200,000 barrels per day, particularly of heavier crude grades needed by U.S. refiners.

“This would be welcome news for U.S. refiners, as it would ease tightness in the heavier crude market,” ING wrote.

The prospect of more Venezuelan barrels has eased supply concerns stemming from recent disruptions to Black Sea exports and Azeri crude loadings at Turkey’s Ceyhan port.

“The issues around CPC and Azeri loadings are now neutered by the U.S. allowing limited licenses for partners with Venezuela’s PDVSA,” John Evans added.

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Outlook: Holding pattern with upside risks

Despite this week’s inventory draw in the U.S. and tight product markets, traders remain cautious:

• Trade policy uncertainty remains elevated ahead of the August 1 tariff deadline.

• The supply-demand balance could shift quickly if either U.S. sanctions tighten (on Russia or Iran) or new supply (from Venezuela or elsewhere) enters the market faster than expected.

For now, prices remain stuck in their July range, with macro sentiment continuing to overshadow physical market drivers.

“The summer demand season is peaking, and the next big test will be whether product draws stay firm as August begins.”