Diesel pump prices could surge for UK drivers if Donald Trump orders military action in Venezuela, analysts have warned.
Venezuela specialises in the “heavy sour” grades of crude oil that are used to make diesel, meaning a supply disruption could have an outsized impact on fuel costs.
Although the world is oversupplied with oil this year, helping to keep prices low, there is far less heavy-sour product to go around, and the US and Chinese refineries which rely on it cannot easily switch to processing an alternative.
Cyril Widdershoven, an analyst at the think tank Strategy International Cyprus, said: “Venezuela’s one million to 1.1 million barrels per day of heavy-sour output are crucial for US and Asian refineries. Any disruption could spike Brent and diesel prices.”
Some estimates suggest that these heavy refiners might have to pay anything from $5 (£3.7) to $15 a barrel extra for their oil, if there is a scramble to secure alternative supplies from Saudi Arabia or the United Arab Emirates.
The diesel market was already feeling the strain from Ukraine’s military campaign against Russian refineries. Although a large chunk of the British diesel price comprises taxes, the price per litre has climbed 5pc since the middle of the year.
David Oxley of Capital Economics said: “The diesel price has been on a bit of a tear recently. Ukrainian drones are taking Russian refinery capacity offline.”
The Brent crude oil price jumped as much as 2pc during trade on Monday after a Ukrainian drone attack on Russia’s Caspian Pipeline Consortium, and amid increasing concern about the US-Venezuela tensions.
Mr Widdershoven said: “Since the Russian invasion of Ukraine in 2022, Europe has leaned heavily on US diesel and gasoline, as Russian products were sanctioned. Any change in US refinery output will lead to higher product import bills and diesel premiums in Europe.”
On Saturday Mr Trump posted on his Truth Social platform that “the airspace above and surrounding Venezuela [is] to be closed in in its entirety”, citing concerns about narcotics trafficking.
Having already launched over 20 strikes on alleged smuggling vessels, killing more than 80 people, the US in November deployed more Navy vessels to the region, including an aircraft carrier.
This has triggered speculation that the White House may be planning military strikes or even an invasion aimed at ousting Venezuelan president Nicolas Maduro.
Mr Trump has repeatedly been ambiguous about his plans, refusing to rule anything out.
When journalists on Sunday asked about the previous day’s Truth Social post, Mr Trump said: “Don’t read anything into it.” But the US president added that “we consider Venezuela to be a not-very-friendly country”.
On Monday, the US Federal Aviation Administration published a more limited guidance, identifying four “exclusion zones” where non-commercial civilian aircraft were warned against flying.
Venezuela sits on 17pc of the world’s proven oil reserves, and pumps about one million barrels a day – but that is barely a third of what it used to produce in its 1990s heyday.
Mr Oxley said: “A lot of that is down to mismanagement in the past 15 years or so. But it means that in the grand scheme of things, if that Venezuelan oil went offline it wouldn’t be as big a deal as it once was.”
Other analysts, however, say a prolonged military skirmish would not just curtail oil supplies but also jack up worldwide insurance and freight costs.
