Oil prices have increased after US imposed sanctions on Venezuelan oil firm Petroleos de Venezuela (PDVSA), which is expected to reduce crude exports.
International Brent crude oil futures rose 61 cents at $60.54 a barrel, while US West Texas Intermediate (WTI) crude futures increased 48 cents at $52.47 a barrel, Reuters reported.
The potential of Organization of the Petroleum Exporting Countries (OPEC) member Venezuela has not been realised due to a lack of investment.
The country has the world’s biggest proven oil reserves and is currently implementing a deal to decrease supplies.
Reuters quoted PVM as saying: “The Latin American country is predominantly the producer of heavier crude, exactly what US Gulf refiners are thirsty for.
“They will now have to turn elsewhere (possibly to Mexico, Saudi Arabia and Iraq) to satisfy their needs for this type of crude, which would inevitably lead to a price spike.”
Refinitiv ship tracking data and trade sources revealed a fall in Venezuela’s exports last year to approximately more than one million barrels per day (Mbpd) from 1.6Mbpd in 2017.
Despite political differences, the US has been the biggest buyer of oil from Venezuela.
Global oil supply remains high primarily due to an increase in US crude oil production last year to 11.9Mbpd.
A Reuters poll showed that China’s industrial activity likely shrank for the second straight month in January, increasing concerns over the risks the slowdown poses to the global economy.