What Trump’s threatened ‘blockade’ on sanctioned Venezuelan oil tankers means for gas prices

(NEW YORK) — Oil prices jumped about 3% after President Donald Trump this week threatened to blockade all sanctioned oil tankers traveling in and out of Venezuela.

Venezuela, which has the largest known oil reserves in the world, exports hundreds of thousands of barrels of oil each day.

The threatened blockade risks a reduction of global oil supply and an amplification of geopolitical uncertainty — both of which could further push up oil prices and, in turn, pinch drivers at the pump, some analysts told ABC News.

But, they added, the effect on prices will likely remain muted unless the conflict escalates significantly, since Venezuela accounts for less than 1% of global oil output and most of its oil is sold on the black market.

Here’s what to know about what the threatened U.S. blockade means for oil and gasoline prices:

Where does the blockade stand and how has Venezuela responded?
On Tuesday, Trump threatened what he called a “blockade” of all sanctioned oil tankers traveling in and out of Venezuela, ratcheting up pressure on the Venezuelan President Nicolas Maduro, whose government depends in part on revenue derived from oil sales.

“Venezuela is completely surrounded by the largest Armada ever assembled in the History of South America,” Trump wrote in a social media post. “It will only get bigger, and the shock to them will be like nothing they have ever seen before.”

A day later, Maduro said Venezuela would continue to trade oil, defying Trump’s threat.

“Trade in and out will continue — our oil and all our natural wealth that by the constitution and Bolivar’s legacy belongs — our wealth, our land, and our oil — to its only legitimate owner, which for centuries and centuries has been our sovereign people of Venezuela,” Maduro said on Wednesday, originally in Spanish.

The U.S. currently has 11 warships in the Caribbean — the most in decades — but even with an increased military presence, that would likely not be enough to put in place a blockade in the traditional sense, which involves sealing a country’s coastline completely and would effectively have been a declaration of war.

Why has the threatened blockade pushed up oil prices?
The threatened blockade of sanctioned oil tankers drove up the U.S. West Texas Intermediate futures price — a key measure of U.S. oil prices — by about 3%, landing the price around $56.50 per barrel.

The measure had dropped to its lowest level since 2021 on Tuesday, just hours before Trump’s announcement. The dip in prices stemmed from a glut of oil alongside relatively slow global economic growth, which has constricted demand for fossil fuels.

“Everybody and their grandmother is bearish on oil prices,” Denton Cinquegrana, chief oil analyst at the Oil Price Information Service, told ABC News.

The threatened blockade disrupted those price doldrums, at least to a minor degree, some experts said.

Venezuela has exported about 749,000 barrels per day this year, with at least half that oil going to China, according to data from Kpler. That oil output amounts to less than 1% of global supply.

The news caused a “knee-jerk reaction” in oil markets due to heightened uncertainty tied to the U.S.-Venezuela conflict, Christopher Tang, a professor at the UCLA Anderson School of Management who studies supply chains, told ABC News. A continued standoff could push oil prices up to around $65 or $70 per barrel, but they’re unlikely to go much higher, Tang added.

“It’s not going to go up to $100 a barrel,” Tang said.

What could the threatened Venezuelan oil blockade mean for gas prices?
A jump in oil prices typically brings about an ensuing uptick in the cost of gasoline at the pump, some experts said, since crude oil makes up the key ingredient in auto fuel.

“The single most important price driver of gasoline is crude oil. As crude oil goes up, we expect gasoline to go up,” Timothy Fitzgerald, a professor of business economics at the University of Tennessee who studies the petroleum industry, told ABC News.

The average price of a gallon of gas stands at about $2.88, which marks a 5% decline from a year earlier, AAA data showed. Gas prices are hovering near their lowest level in four years due in part to the low cost of crude oil.