Oil prices soar amid political & economic turmoil in Venezuela

Oil prices have escalated by quite a considerable amount amidst the uproar in Venezuela which prompted apprehensions that its crude exports would soon get disrupted. If reports are to be believed, Washington had signaled on Thursday that it could enforce sanctions on Venezuelan oil exports as Caracas slopes further into economic and political turmoil.

According to a note by Vanda Insights’ Vandana Hari the oil market is partly pricing in the risk to Venezuelan crude production, which’s been significantly plunging in the last few years and presently deteriorates right above 1 Mn barrels per day.

According to share market reports, Brent crude’s oil futures were trading at $61.62 per barrel at 07:55 GMT, 0.9 percent or 53 cents over their last closing price. Before that, on Friday itself there came a point when the international benchmark crude soared to $61.92 per barrel.

Amidst vehement road protests, Venezuela’s opposition party leader Juan Guaido avowed himself as the provisional president, being backed by Washington and major parts of Latin America, inciting Nicolas Maduro, the nation’s trailblazer since 2013, to terminate relationships with the United States, claimed sources close to the development.

In reality, worldwide oil markets still have sufficient oil supply, owing to expanding production in the United States, where crude output surged by over 2 Mn barrels/day previous year to a record high of 11.9 million barrels/day, stated sources acquainted with the matter.

Barclays Britain recently released a note which stated that the record U.S. oil generation is anticipated to offset any interim disruptions to Venezuela’s supply due to likely U.S. sanctions. Reportedly, the Barclays bank reduced its 2019 average Brent crude oil estimates to $70 per barrel, down from $72 per barrel previously.

For the uninitiated, the increase in U.S. oil output has significantly swelled U.S. fuel inventories.

According to the weekly report by the United States Energy Information Administration, gasoline stocks surged for the eighth consecutive week, by 4.1 Mn barrels to a record 259.6 Mn barrels.