Crude oil futures were higher during morning trade in Europe Wednesday on supply concerns stemming from US sanctions on Venezuela’s oil sector, sliding Iranian oil exports, and production cuts by OPEC/non-OPEC which came into effect at the start of the year. At 1213 GMT, ICE March Brent crude futures were 66 cents/b higher at $61.98/b, while the NYMEX March light sweet crude contract was up 56 cents/b at $53.87/b.
US sanctions on Venezuela’s state-owned PDVSA announced by the Trump administration Monday have the potential to effectively end crude imports from the South American nation, analysts said. “Other buyers are also likely to be hesitant to do business with PDVSA…after all, in doing so they would put their US business at risk,” analysts at Commerzbank said Wednesday.
US imports of Venezuelan crude averaged about 574,000 b/d in December, down roughly 40% from July 2016, data from the US Customs and Border Protection showed. “It is already a distressed oil industry, and will not get better in regards to exports of heavy sour crudes,” DNB Markets senior oil analyst Helge Andre Martinsen said. “OPEC cuts, Iranian production slides and sanctions on Venezuela will add onto this issue.” Asian imports of Iranian crude oil have resumed, but at sharply lower levels, as top customers, China, India, Japan and South Korea press for the additional US sanctions relief when their waivers expire in May.