Investing.com -- Oil prices fell Thursday after the United States eased sanctions on Venezuela, potentially increasing global supply, but losses have been curtailed by the uncertainty in the Middle East.
By 09:35 ET (13.35 GMT), the U.S. crude futures traded 1.1% lower at $86.28 a barrel, while the Brent contract dropped 1.2% to $90.39.
U.S. eases sanctions on Venezuela
The Biden administration on Wednesday eased sanctions on Venezuela's oil sector in response to a deal reached between the government and opposition parties to try and ensure fair elections in 2024.
A new general license authorized OPEC member Venezuela, which had been under sanctions since 2019, to produce and export oil to its chosen markets for the next six months without limitation.
It could take some time for Venezuela's oil output to expand substantially, as the infrastructure will probably need revamping, but this deal could provide the incentive for foreign companies to return in time.
Egypt agrees to reopen Gaza border
Crude prices climbed about 2% in the previous session on concerns of disruptions to global supplies after Iran called for an oil embargo on Israel over the conflict in Gaza.
However, the Organization of the Petroleum Exporting Countries has shown few signs of taking any immediate action on Iran's call, easing worries over potential disruptions.
Additionally, Egypt has agreed to reopen its border crossing with Gaza to allow aid to reach Palestinians, following intensive negotiations with the U.S., helping the humanitarian crisis and potentially lessening tensions across the Middle East.
U.S. crude inventories fall 4.5 million barrels
Also providing support for the market was another larger-than-expected inventory draw from the U.S., the world's biggest oil consumer.
Crude inventories fell by 4.5 million barrels to 419.7 million barrels, while gasoline fell by 2.4 million barrels to 223.3 million barrels, according to data from the Energy Information Administration, released Wednesday.
The sustained drop in gasoline and distillate inventories indicated that U.S. fuel demand remained robust.
“The concern for the market is that crude oil inventories continue to edge lower at a time when they should be building, whilst stocks are also a little more than 20MMbbls below the 5-year average,” said analysts at ING, in a note.
Oil markets were also encouraged by data showing better-than-expected economic growth in world no.1 oil importer China, although growth still remained below pre-COVID levels.
(Ambar Warrick contributed to this article.)