SOURCE (abridged): proshareng.com

Oil Price Rises Above $66 on OPEC Deal, US Sanctions

Crude oil rose for a 5th day yesterday, on track for its strongest first quarter in 8 years, thanks to a growing belief among investors that the Organisation of Petroleum Exporting Countries’ (OPEC) supply cuts will prevent build-up in unused fuel, though concerns over China’s economy tempered gains. This is a boost to efforts of the Nigerian Government to fund the 2019 budget, which is predicated on oil price of $60 per barrel.

USA sanctions against Iran and Venezuela have also helped to boost prices of crude oil to their highest levels since November 2018. While the US West Texas Intermediate (WTI) rose by 0.8% to hit $56.13 before dropping to $55.97, the global benchmark crude, Brent rose by 0.6% to $66.65 before it settled at $66.44.

For both benchmarks, these were their highest levels since November 20, 2018. Crude oil has risen nearly 25% so far this year and is on course for its strongest first-quarter performance since 2011, thanks largely to commitment by OPEC and allies to cut output. Reuters reported that refiners around the world have to pay more to secure supplies of medium or heavy, sour crudes produced by Iran and Venezuela, both of which are under United States sanctions.

US Treasury Department had announced sanctions that effectively halted purchases of oil from Venezuela, as part of an effort to push out the country’s President, Nicolás Maduro, in favour of his rival, Juan Guaidó.

About 40% of Venezuela’s oil is sold to the USA, which claims that Maduro and his inner circle diverted billions of dollars in Venezuela’s national oil company, PDVSA’s profits to their personal accounts and to pay off military officers said to be propping up Maduro’s government.