- Global Crude Oil Sustains Uptrend on Venezuela, Iran Worries
Global oil prices rose to more than 4-year high on Monday as the economic crisis in Venezuela threatened the country’s oil supplies amid the possibility of Donald Trump-led administration walking away from Iran deal on May 12.
The U.S. West Texas Intermediate rose 0.7 percent to $70.18 a barrel during the Asian trading session on Monday. While Brent crude oil, against which Nigeria’s crude oil is priced, jumped 0.5 percent to $75.22 a barrel.
Experts believed that the ongoing crisis in one of the largest oil exporters, Venezuela, may further crimp its production and exports.
Shannon Rivkin, investment director of Australia’s Rivkin Securities, said that oil prices had been driven up due to “growing concerns over the economic collapse of Venezuela and its oil industry, plus possible new sanctions against Iran from the Trump administration.”
U.S. oil firm ConocoPhillips has moved to take key Caribbean assets of Venezuela’s state-run PDVSA to enforce a $2 billion arbitration award, actions that could further impair PDVSA’s declining oil production and exports.
Venezuela’s oil output has halved since the early 2000s to just 1.5 million barrels per day (bpd), as the South American country has failed to invest enough to maintain its petroleum industry.
Beyond Venezuela’s woes Greg McKenna, chief market strategist at futures brokerage AxiTrader, said “the big story this week is going to be about oil and the Iran Nuclear deal.” Most market participants expect Trump to withdraw from the pact, he said.
Iran re-emerged as a major oil exporter in 2016 after international sanctions against it were lifted in return for curbs on Iran’s nuclear program.
Expressing doubts over Iran’s sincerity, Trump has threatened to walk away from the 2015 agreement by not extending sanctions waivers when they expire on May 12, which would likely result in a reduction of Iran’s oil exports.