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Oil prices crept higher on Tuesday after the US government slapped sanctions on Venezuela's state-owned oil firm PdVSA in a move aimed at severely curbing the OPEC member's crude exports to the United States.
US West Texas Intermediate (WTI) crude futures were at $52.17 per barrel at 0215 GMT, up 18 cents, or 0.3 per cent from their last settlement. International Brent crude oil futures were at $60.08 per barrel, up 15 cents, or 0.3 per cent.
Despite their political differences, the United States remains a major destination for Venezuelan oil, although volumes have steadily declined over the past years amid Venezuela's economic crisis and as the US government has started targeting Caracas' financial sector with sanctions.
The US government is supporting Venezuelan opposition leader Juan Guaido, who proclaimed himself interim president last week and is demanding the resignation of sitting President Nicolas Maduro.
“As a result of today's action, all property and interests in property of PdVSA subject to US jurisdiction are blocked, and US persons are generally prohibited from engaging in transactions with them,” a US Department of the Treasury statement said late on Monday. It added that “persons operating in the oil sector of the Venezuelan economy may be subject to sanctions”.
Venezuela has the world's biggest proven oil reserves and is a member of the Organization of the Petroleum Exporting Countries (OPEC).
Despite its huge reserves, Venezuela's exports declined from 1.6 million barrels per day (bpd) in 2017 to little more than 1 million bpd in 2018, Refinitiv ship tracking data and trade sources said.
The decline comes amid a political and economic crisis which has seen investment plummet, power and key equipment supplies disrupted, and salaries left unpaid.
While news of the sanctions against Venezuela grabbed headlines, market watchers said the fundamental issue for the global oil trade remained plentiful supply.
Jeffrey Halley of futures brokerage OANDA in Singapore said, ”The more significant issue is (global) supply, and despite OPEC's best efforts (to reduce output) there seems to be plenty of it.”
Global oil supply remains high largely because of a more than 2 million bpd increase in US crude oil production last year, to a record 11.9 million bpd.
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