Oil Prices Edge Higher on Venezuela Supply Worries

Oil prices rose on Tuesday on concerns that Venezuela’s crude output could drop further following a disputed presidential election.

Brent crude stood at $79.39 per barrel, up 17 cents, or 0.2%, from their last close on Tuesday. Brent broke through $80 for the first time since November 2014 last week. US West Texas Intermediate crude reached $72.47 a barrel, up 23 cents, or 0.3%, CNBC reported.

“(Oil inventory) is tight and the US will probably tighten sanctions on Venezuela, which will make the Venezuela situation worse and which means we can expect continued falling Venezuelan production,” said Tony Nunan, oil risk manager at Mitsubishi Corp in Tokyo.

Venezuela’s socialist President Nicolas Maduro faced widespread international condemnation on Monday after his reelection in a weekend vote his critics denounced as a farce cementing autocracy in the crisis-stricken oil producer.

The United States is actively considering oil sanctions on Venezuela, where output has dropped by a third in two years to its lowest in decades.

“Tightening the economic screws will severely cripple ... Venezuela’s ability to export while making it virtually impossible for the country to acquire dollars,” said Stephen Innes, the head of trading for Asia-Pacific at futures brokerage OANDA in Singapore.

Looming US sanctions against Iran could reduce the country's oil exports by 200,000 barrels per day by the fourth quarter, Mitsubishi Corp’s Nunan estimated.

Elsewhere, Washington and Beijing both claimed victory on Monday as the world’s two largest economies stepped back from the brink of a global trade war and agreed to hold further talks to boost US exports to China. The growing production of shale oil could curb oil prices eventually and widen the price spread between WTI and Brent crude oil, said Nunan.