Brent oil prices near $80 on supply worries
SINGAPORE (Reuters) – Oil prices rose yesterday, with Brent edging closer to $80 per barrel, on concerns that Venezuela’s crude output could drop further following a disputed presidential election and potential US sanctions on the OPEC-member.
The US also toughened its stance on Iran and made a list of sweeping demands, which could further curb the country’s crude oil exports and boost oil prices.
Brent crude futures were at $79.37 per barrel at 0632 GMT, up 15 cents, or 0.2 percent, from their last close. Brent broke through $80 for the first time since November 2014 last week.
US West Texas Intermediate (WTI) crude futures were at $72.45 a barrel, up 21 cents, or nearly 0.3 percent.
“(Oil inventory) is tight and the US will probably tighten sanctions on Venezuela which will make the Venezuela situation worse and which means we can expect continued falling Venezuelan production,” said Tony Nunan, oil risk manager at Mitsubishi Corp. in Tokyo.
“Combined with expectations for falling Iranian production as the US pressures allies to reduce their imports, this will push crude oil prices up to $80 a barrel and we think it can go higher.”
Venezuela’s socialist President Nicolas Maduro faced widespread international condemnation on Monday after his re-election in a weekend vote his critics denounced as a farce cementing autocracy in the crisis-stricken oil producer.
The US is actively considering oil sanctions on Venezuela, where output has dropped by a third in two years to its lowest in decades.
“Tightening the economic screws will severely cripple Venezuela’s ability to export while making it virtually impossible for the country to acquire dollars,” said Stephen Innes, head of trading for AsiaPacific at futures brokerage OANDA in Singapore.
Concerns that looming US sanctions on Iran will curb that country’s crude exports have also been boosting oil prices in recent weeks.
The US on Monday demanded Iran make sweeping changes – from dropping its nuclear program to pulling out of the Syrian civil war – or face severe economic sanctions as the Trump administration hardened its approach to Tehran.
This could reduce Iranian oil exports by 200,000 barrelsper-day by the fourth quarter, Mitsubishi Corp.’s Nunan estimated.