Crude oil prices have declined as rising US output outweighed production losses in sanctions-hit Iran and Venezuela.

Brent oil futures, the international benchmark for crude prices, slipped 28 cents to reach $70.47 per barrel while US West Texas Intermediate (WTI) crude futures decreased six cents to $61.75, reported Reuters. Brent benchmark is on course to post its first weekly loss after recording five weeks of gains and WTI is set for its second consecutive weekly decline.

Data available with the Energy Information Administration indicated that the US crude oil production touched a record 12.3 million barrels per day (Mbpd) for the week ending 26 April. This represents a rise of nearly two Mbpd since 2018.

SEB analyst Bjarne Schieldrop was quoted by Reuters as saying: “Even with deep losses in supply from Iran and Venezuela, as well as a few other countries around the world, OPEC+ will still need to hold back production to balance the market.”

The government data also pointed out that US crude exports breached the three Mbpd for the first time in 2019.

“Even with deep losses in supply from Iran, Venezuela and a few other countries around the world, OPEC+ will still need to hold back production to balance the market.”

In 2019 markets have seen supply disruptions due to ongoing production cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, as well as US sanctions against Iran and Venezuela. However, surging US crude output has countered these disruptions.

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By GlobalData

Meanwhile, sources familiar with Saudi Arabia’s policy told Reuters that the kingdom could raise production in June to cater to domestic demand for power generation. In spite of the increase in output, the kingdom’s production levels are expected to remain within its quota specified in the OPEC supply pact.

In May Saudi Arabia, the de-facto leader of OPEC and the world’s top crude exporter, is expected to produce about ten Mbpd. The figure will be marginally higher than last month but still below its 10.3 million bpd quota.

Also contributing to the fall in prices is the resumption of clean oil supply by Russia through the Druzhba pipeline towards western Europe. Last week, several European nations suspended oil imports from Russia over concerns of contamination.