World oil prices jump amid developments around Venezuela

By Azernews

By Sara Israfilbayova

Oil prices exceeded the maximum for two months on July 31 following a decrease in the U.S. inventories, as well as the threat of sanctions against OPEC-member Venezuela.

Brent crude futures were at $52.85 per barrel, up 0.6 percent. Prices hit $52.90 per barrel earlier in the day, their highest since May 25, while U.S. West Texas Intermediate (WTI) futures jumped over $50 per barrel and were at $49.97 per barrel up 0.5 percent, according to Reuters.

Prices have risen by about 10 percent since the last meeting of OPEC and non-OPEC members on July 24 in St. Petersburg, Russia, when the group discussed potential measures to further influence oil markets.

Following the results of the meeting, ministerial committee announced the results of the transaction for the first half of 2017, having estimated its level at 98 percent

Meanwhile, after rising by more than 10 percent since mid-2016, U.S. oil production dipped by 0.2 percent to 9.41 million barrels per day in the week to July 21.

U.S. crude oil inventories have fallen by almost 10 percent from the March peaks to 483.4 million barrels. Drilling for new U.S. production is also slowing down, with just 10 rigs added in July, the fewest of any month since May 2016.

Moreover, the U.S. eyes issue of imposing new sanctions on the Venezuelan oil and gas sector, according to the Wall Street Journal.

The U.S. condemns the suppression of political dissent in Venezuela, as well as the attempts of President Nicolás Maduro to change the constitution of the country with a view to weakening the opposition-controlled parliament and increasing the authority of the head of state.

However, the Wall Street Journal reports that there is no talk of a full-scale ban on the import of Venezuelan oil and oil products to the U.S. The list of possible restrictions is quite broad: from personal sanctions to officials to banning the Venezuelan state-owned oil and natural gas company PDVSA to make transactions in U.S. dollar.

The OPEC+ Technical Committee will hold meetings in Abu Dhabi on August 7-8, chaired by Russia and Kuwait, with some participants of the agreement on the reduction of oil production in order to discuss the fulfillment of their obligations under the deal, OPEC reported on July 29.

OPEC and other major oil producers agreed in December 2016 to remove 1.8 million barrels a day from the market. 

The parties decided to extend the production adjustments for a further period of nine months, in May 2017.