Oil prices up two per cent following US sanctions on Venezuela

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NEW YORK: Oil prices rose more than 2 percent on Tuesday after the United States imposed sanctions on state oil company PDVSA, a move likely to reduce OPEC oil exports and alleviate some global concerns of oversupply.

International Brent crude futures rose $ 1.39 to settle at $ 61.32 a barrel, an increase of 2.32 percent, while US West Texas Intermediate (WTI) crude futures. UU They increased by 1.32 or 2.54 percent, to settle at 53.31 dollars per barrel. Venezuela is among the largest producers of heavy crude in the world, and the United States has been its largest customer, with almost half of the country’s export volumes.

The restrictions of the Trump government on Venezuelan crude, aimed at expelling President Nicolás Maduro from power, do not allow US companies to buy oil from the Latin American country. However, revenues from these sales will be placed in a “blocked account” that should discourage PDVSA from shipping crude to the United States.

“Today’s price advance seemed like a belated reaction to yesterday’s Venezuelan headlines, as traders may have had doubts about the impact on domestic oil supplies,” said Jim Ritterbusch, president of Ritterbusch and Associates, in a statement. note.

In addition, “he wrote that the chances of some refiners from the Gulf Coast having to pay for alternative actions from places like Saudi Arabia, has already suggested that they will direct charges outside the United States.” Venezuela’s exports fell to just over 1 million barrels per day (bpd) in 2018 from 1.6 million bpd in 2017, according to Refinitiv vessel tracking data and commercial sources.

Petromatrix estimated that Venezuelan exports will drop by 500,000 barrels per day under current conditions. Venezuela is a member of the Organization of Petroleum Exporting Countries, which is implementing a supply reduction agreement to support prices.

Russia, the largest non-OPEC ally, and China have publicly denounced US sanctions. Meanwhile, Libya’s largest oil field, El Sharara, will remain closed until the departure of an armed group occupying the site, said the head of National Oil Corp.

For the chart on Venezuela’s crude oil exports, despite some reductions, the world’s oil supply remains high, largely due to an increase of more than 2 million barrels per day in the production of crude oil. USA UU Last year to a record of 11.9 million barrels per day.

Last week, US crude reserves rose by 1.1 million barrels compared to analysts’ expectations of a 3.2 million-barrel increase, the industry group, the American Petroleum Institute, said on Tuesday. after prices stabilized. Oil and gas inventory data from the US Energy Information Administration. UU They will be published on Wednesday.

Some in the oil industry are also concerned that gross demand may stammer if the trade war between Washington and Beijing slows global economic growth. In China, a major importer of oil, signs of a slowdown have emerged. Activity in its vast manufacturing sector is expected to shrink for the second consecutive month in January, according to a Reuters poll.