However, crude oil markets have barely reacted to the measure. On Tuesday morning, Brent made some shallow recovery attempts but attracted the selling interest again and failed to regain the important $60 level.
Why is the market so indifferent to geopolitics this time? In fact, there is a number of reasons behind the lack of positive reaction.
First, traders are focused on the US-China trade talks amid the growing worries about the global economy and the outlook for oil demand.
Second, Venezuela’s exports declined to little more than 1 million barrels per day in 2018 already and further cuts could be easily replaced by Middle Eastern countries so the general impact on the supply side could be minimal. Third, there are exemptions for a number of US companies, including Chevron, Baker Hughes and others, that will continue operations in Venezuela until July 27. Fourth, it may be difficult, but PDVSA may yet be able to find new buyers in the future.
The effect from the sanctions could be felt by the global markets some time later but for now, traders don’t see any