Oil jumps 2% as Trump's Venezuela blockade stokes uncertainty

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LONDON, Dec 17 (Reuters) - Oil prices rallied by nearly 2% on Wednesday after U.S. President Donald Trump ordered a complete blockade of all sanctioned oil tankers entering and leaving Venezuela, raising global political tensions at a time of concerns over demand.

Brent crude futures were up 99 cents, or 1.7%, at $59.91 a barrel at 1302 GMT, while U.S. West Texas Intermediate crude rose 97 cents, or 1.8%, to $56.24 a barrel.

Oil prices settled near five-year lows in the previous session on progress in Russia-Ukraine peace talks, as a deal may see Western sanctions on Moscow eased, freeing up supply even as the market grapples with fragile global demand.

Trump on Tuesday ordered a blockade of all sanctioned oil tankers entering and leaving Venezuela, adding that he now regarded the nation's rulers as a foreign terrorist organization .

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While many vessels picking up oil in Venezuela are under sanctions, others transporting the country's oil and crude from Iran and Russia have not been sanctioned. Tankers chartered by Chevron (CVX.N) are also carrying Venezuelan crude to the U.S. under an authorisation previously granted by Washington.

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China is the biggest buyer of Venezuelan crude, which accounts for roughly 4% of its imports.

A large drop in U.S. inventories also supported prices.

Crude stocks fell by 9.3 million barrels last week, market sources said, citing American Petroleum Institute figures on Tuesday. The fall, if confirmed by Energy Information Administration data later on Wednesday, is much higher than the 1.1 million-barrel drop analysts polled by Reuters had predicted.

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