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Oil prices surged Wednesday following US President Donald Trump's order to blockade sanctioned oil tankers traveling to and from Venezuela, sending energy stocks higher and rippling through global markets already navigating conflicting signals about supply and geopolitical tensions.
Both Brent crude and West Texas Intermediate contracts jumped more than two percent in early trading before moderating to gains of 1.5 percent each by early afternoon, with Brent reaching $59.80 per barrel and WTI climbing to $55.96. The rally lifted European energy giants BP and Shell approximately two percent in London trading, propelling the UK's FTSE 100 index to outperform other major markets.
The blockade announcement reversed some of Tuesday's sharp 2.7 percent decline in crude prices, which came after Trump suggested a deal to end the war in Ukraine was closer than anticipated. Such an agreement could potentially ease sanctions on Russian oil, adding to existing oversupply concerns that have pressured markets in recent months.
Market analysts noted competing pressures on oil prices, with reports emerging that the Trump administration is preparing additional sanctions on Russia's oil sector should President Vladimir Putin reject a Ukraine peace proposal. Forex.com analyst Fawad Razaqzada characterized the Venezuela blockade as the driving factor behind Wednesday's price movement, saying it represented "the big news" lifting oil markets.
The geopolitical uncertainty comes as investors weigh the potential for both increased and decreased global oil supply, creating volatility in energy markets that had already been trading lower on oversupply concerns.
British inflation data provided a separate boost to London's stock market, with the pound weakening on expectations of multiple Bank of England interest rate cuts. Britain's annual inflation rate slowed to 3.2 percent in November, down from 3.6 percent in October and below the 3.5 percent analysts had predicted. The softer-than-expected figures cemented market expectations that the central bank will reduce its main interest rate Thursday and implement additional cuts during 2026.
Meanwhile, the Eurozone's inflation rate held steady at 2.1 percent in November according to slightly revised official data, remaining just above the European Central Bank's target. The ECB is expected to maintain current interest rates Thursday for its fourth consecutive meeting, though policymakers face intensifying debate about future monetary policy direction.
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Investors continued digesting Tuesday's US non-farm payrolls report, which revealed unemployment in the world's largest economy had climbed to a four-year high of 4.6 percent in November. Analysts said the jobs data did little to alter expectations that the Federal Reserve will likely hold key interest rates unchanged when it meets in January, though markets are now focused on Friday's consumer price inflation data for additional guidance.
Stock indices opened higher on Wall Street Wednesday, while European and Asian markets showed mixed performance. New York's Dow Jones Industrial Average rose 0.1 percent to 48,170.24 points, while the S&P 500 gained less than 0.1 percent. London's FTSE 100 rallied 1.5 percent, while Paris and Frankfurt indices declined slightly.
In corporate developments, Chinese chipmaker MetaX Integrated Circuits Shanghai saw its share price soar more than 550 percent in its Shanghai debut. Netflix shares jumped 2.1 percent after Warner Bros. Discovery rejected a hostile takeover bid by Paramount in favor of being acquired by the streaming platform, sending Warner Bros. Discovery shares down 1.1 percent and Paramount shares tumbling 3.6 percent.
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