Oil prices higher on Venezuela exports concerns

Crude Oil

Crude Oil

OPEC's No. 3 producer Iran is also subject to USA sanctions, including curbs on its oil trade, after President Donald Trump quit an global accord on the Islamic Republic's nuclear program last month.

Venezuela wrote to fellow OPEC members urging them to unite against USA sanctions, echoing a similar letter from Iran, according to people with knowledge of the matter.

Brent has been pushed up by voluntary production cuts led by the Middle East dominated producer cartel of the Organization of the Petroleum Exporting Countries (OPEC) and by top producer Russian Federation, which were put in place in 2017. The US last pressed Riyadh to increase output in 2012.

Plans to increase oil production were already addressed in a meeting held in Kuwait for a number of Arab oil ministers, according to an official OPEC statement that was cited by Bloomberg as well as the official Kuwaiti news agency KUNA.

U.S. oil production has seen a record high and exports are hitting records as well.

"The oil market appears to be discounting a bullish draw to crude stocks from the EIA report and the apparent accelerating demise of the Venezuelan oil industry, to focus on hopes of returning OPEC barrels instead", he said. The agreement was concluded for the first half of 2017 and was extended until the end of the first quarter of 2018 at a meeting on May 25, 2017.

"Nevertheless, growing prospects for an increase in production from the "OPEC Plus" and rising oil output from the US will cap price gains".

A third OPEC source said it would be against the OPEC charter to raise output just because Washington had requested it.

However, Saudi Arabia and Russian Federation have said cuts could be eased after receiving calls from consumers including the United States, China and India to support global demand.

OPEC members exported a total of 24.86 million barrels a day last year, down by 406,000 barrels compared to the prior year total, with most (62.6%) sent to the Asia-Pacific region. Crude, the global benchmark, was mostly unchanged.

"A consensus for higher oil prices and revenues will be the bedrock of every OPEC nation".

Reuters reported in late May that OPEC and its allies could raise production by about 1 million bpd from July to address any potential oil shortages.

Secondly, the oil shortage from Venezuela is keeping the oil prices on hold.

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