Economy

OPEC cuts & USA sanctions against Iran and Venezuela boosting global crude prices

OPEC cuts & USA sanctions against Iran and Venezuela boosting global crude prices

At the moment there is no sign that Venezuela's leadership will change hands, which signals to analysts that the sanctions and related supply decrease will continue to prop up oil prices in the near term.

Oil prices gained almost two percent on Tuesday, supported by OPEC-led production cuts which Saudi Arabia said it would surpass by over half a million barrels per day (bpd) and by us sanctions against Iran and Venezuela.

United States crude output is expected to grow by 1.45 million bpd this year and by another 790,000 bpd next year to hit 13 million bpd in 2020, according to the Energy Information Administration.

Saudi Arabia intends to begin exploring for and producing oil and gas overseas, the kingdom's energy minister has said.

OPEC is partnering with 10 non-member nations, including Russian Federation, to keep 1.2 million bpd off the market. Saudi Arabia slashed oil production by 350,000 barrels per day.

The IEA said oil prices had not increased "alarmingly" since US sanctions were imposed on Venezuela because the market is still working off the surpluses built up in the second half of 2018 - when global supply was estimated to have exceeded demand by 1.3 million barrels per day (b/d). "With economic momentum expected to slow in the current year ... this makes economic developments in the major consuming nations a key factor to monitor going forward".

"Initial production and supply data from participating countries is beginning to show various levels of conformity, as can be viewed in OPEC's latest Monthly Oil Market Report".

Oil prices fell by more than 1 percent on Monday as U.S. drilling activity picked up and as a refinery fire in the USA state of IL resulted in the shutdown of a large crude distillation unit.

USA commander: North Korea hasn't slowed its nuclear program
Secretary of State Mike Pompeo said during a visit to Slovakia on Tuesday he hoped for "substantial progress" in Hanoi. The North Koreans apparently focused on how Kim will get around Hanoi as well as security and protocol issues.

"Energy commodity prices were mixed in January".

At the start of the year, the investment bank had reduced its outlook for oil prices this year citing abundant supply.

At the same time, major countries within OPEC are eyeing global expansion for the first time.

On the supply side, Saudi Arabia, the defector leader of OPEC, said it was cutting daily production and exports by a further 500,000 barrels per day (bpd) on top of its agreed OPEC quota reduction.

The company has built a substantial global "downstream" presence in refining, with...

US crude oil inventories rose last week to the highest since November 2017 as refiners cut runs to the lowest since October 2017, the Energy Information Administration said.

Before U.S. sanctions came into force at the end of January, Washington shipped large amounts of naphtha to Venezuela.


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