Oil up on shutdown deal, mounting Venezuela woes

Oil up on shutdown deal, mounting Venezuela woes

Oil up on shutdown deal, mounting Venezuela woes

Analysts on Friday said it is unlikely the United States will impose a complete ban of imports of oil or exports of petroleum products to the country, but added it could adopt less dramatic steps that would curtail Venezuelan exports.

Those deliveries are being made largely through oil-for-debt repayment structures as output from Petróleos de Venezuela, S.A., known as PDVSA, has slumped to near 70-year lows during a nationwide economic crisis.

As tensions between the administration of Venezuelan President Nicolas Maduro and the self-proclaimed interim president Juan Guaido continue, officials and experts worldwide have voiced their concerns over the situation, appealing for dialogue while calling for the issue to be resolved without outside influence. US total oil products exports over the past four weeks averaged about 5.2 million barrels per day, 140,750 barrels per day more than the same four-week period a year ago.

With Iran already crippled by USA sanctions, a drop in Venezuelan exports could squeeze global supply.

Venezuela's output has been cut in half since 2016 to less than 1.2 million bpd, according to figures from OPEC secondary sources.

"Canadian producers should be able to capitalize on a crisis like this in terms of placing their barrels [in the US market], but that's where the infrastructure constraints really come to bear", Helima Croft, global head of commodity strategy at RBC Capital markets in NY, said on Friday. Gulf Coast refineries depended on Venezuelan heavy crude for about a quarter of its imports, according to data from the EIA.

Any sanctions would come just as the global market for heavy crude is tightening.

The country could seek additional deals with Turkey, India or other Asian nations.

"America's move to net exports was supposed to be five or six years off", said Kevin Book, managing director of the Washington-based consultancy ClearView Energy Partner.

"While Venezuela will be hard hit the first month, they will find some market for their crude", said Diego Moya Ocampos, principal Americas analyst in country risk at IHS Markit.

On Friday, oil prices gained as concerns over tighter global supply amid the threat of US sanctions on Venezuelan oil sector outweighed surging USA stockpiles.

The United States has overtaken Russian Federation and Saudi Arabia to become the world's biggest crude producer with production levels approaching 12 million barrels per day (bpd).

But gains were limited by data showing record high gasoline inventories and a large, unexpected build in crude stockpiles. "The market could be tighter than what people previously anticipated".

Sanctions could also include US exports of petroleum products to Venezuela that are used for blending with Venezuelan heavy crude.

Oil prices fell 1 percent on Wednesday, weighed down by swelling US inventories and a plunge in global stock markets amid concerns over an economic slowdown. Articles appear on euronews.com for a limited time.

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