Singapore: Brent crude prices traded more than $78 (Dh286.49) per barrel, while West Texas Intermediate (WTI) advanced toward $72 a barrel as Venezuela’s election results escalated the risk of US sanctions against the Organisation of Petroleum Exporting Countries (Opec) nation, adding to mounting concerns about supply following curbs against Iran.
Futures in New York rose as much as 0.9 per cent. President Nicolas Maduro won the elections in Venezuela, increasing the prospect of US sanctions that could curb the nation’s already struggling energy industry. Separately, US Treasury Secretary Steven Mnuchin said his nation and China are “putting the trade war on hold,” easing any risk to oil demand.
Crude in both New York and London is heading for a third monthly gain after geopolitical tensions in the Middle East and US sanctions on Iran pushed it to levels not seen for more than three years. Venezuela’s slumping production, and potential disruptions from Iran, are the biggest current risks to the oil market, but the International Energy Agency said it is in talks with producing nations about their ability to step in to ease any potential supply shortfall.
“Venezuela is the major risk for the oil markets for the next weeks or months to come,” IEA executive director Fatih Birol said in a Bloomberg TV interview. “I have been discussing with key oil ministers from the major oil-producing countries” and expect them to “contribute to the solution of this looming problem in the markets,” whether it’s lost supply from Venezuela or Iran.
West Texas Intermediate for June delivery, which expires on Tuesday, increased 20 cents to $71.48 a barrel on the New York Mercantile Exchange at 10.53am in London. Total volume traded was about 22 per cent below the 100-day average. The more actively traded July contract rose 22 cents to $71.59.
Brent futures for July settlement were 12 cents higher at $78.63 a barrel on the London-based ICE Futures Europe exchange, and traded at a $7.05 premium to WTI for the same month.
Yuan-denominated futures dropped 0.8 per cent to 482.4 yuan a barrel on the Shanghai International Energy Exchange.
America and China agreed to “substantially” reduce the US’s trade deficit in goods with the Asian nation after two days of negotiations. Both sides agreed on “meaningful increases” in US energy and agriculture exports, which soothed the nerves of investors worried that the two major economies were on the verge of an all-out trade war.
Oil production in Venezuela, which holds the world’s biggest known crude reserves, has tumbled amid an escalating economic crisis. The supply concerns are compounded by US President Donald Trump reimposing sanctions on Iran, the third-largest producer in Opec.