Washington: Global oil prices fell on Tuesday after the United States moved ahead with a new oil arrangement involving Venezuela a step that has angered China and added fresh tension to already strained global energy markets.
According to officials and market sources the United States has begun redirecting Venezuelan crude shipments away from China and toward US controlled channels. The move follows recent US action to seize oil tankers linked to Venezuelan exports including vessels suspected of supplying crude to Chinese buyers through indirect routes.
China reacted strongly accusing Washington of economic pressure and interference in sovereign trade. Chinese officials said the US actions disrupted normal global oil flows and harmed the interests of both producers and consumers. Beijing had been one of the largest buyers of Venezuelan oil especially after Western sanctions pushed Caracas to rely more heavily on Asian markets.
The impact was quickly felt in oil markets. Brent and US crude prices fell by more than one percent as traders reacted to expectations that more Venezuelan oil could reach the market under US oversight. Investors also worried that shifting trade routes and political tensions could increase uncertainty in global supply chains.
Venezuela holds the world’s largest proven oil reserves but years of sanctions underinvestment and operational problems have sharply reduced its production capacity. Any increase in exports is expected to be gradual and dependent on infrastructure repairs and policy stability.
Market analysts say China is already looking for alternatives. Chinese refiners are expected to replace Venezuelan barrels with crude from Iran and Russia both of which offer similar heavy grades. This shift could further reshape global oil trade patterns in the coming months.
The US administration has said the oil arrangement is aimed at ensuring transparency and preventing revenue from being misused while also supporting global energy stability. Critics however argue the move risks escalating tensions between major powers and could set a precedent for greater political control over energy resources.
For now traders are watching closely to see how quickly Venezuelan oil flows change and whether China responds with counter measures. With global demand uncertain and geopolitics playing a larger role oil markets are likely to remain volatile in the weeks ahead.