IEA says Venezuela crisis risks disrupting global crude market

Crude Oil

In that letter to OPEC on January 29th, a day before United States inclined sanctions on Venezuelan state-owned oil firm PDVSA, Maduro wrote, "Our country hopes to receive the solidarity and full support of the member countries of OPEC and its ministerial Conference, in the fight we are now having against the illegal and arbitrary intrusion of the United States in the internal affairs of Venezuela".

"Disruptions have increased with risks that Venezuela's production decline accelerates following the introduction of additional USA sanctions related to the Venezuelan oil industry", Reuters quoted the investment bank as saying.

The American Petroleum Institute (API) on Tuesday said that us crude inventories fell by 998,000 barrels in the week to February 8 to 447.2 million, compared with analyst expectations for an increase of 2.7 million barrels.

The oil price has risen sharply on Tuesday.

As of writing, Brent is trading at $63.06 per barrel, representing a 1 percent gain on the day.

The cartel made the pledge past year alongside major oil producing countries outside the cartel, including Russian Federation, to safeguard oil prices against a global economic slowdown.

USA crude oil inventories rose last week to the highest since November 2017 as refiners cut runs to the lowest since October 2017, the Energy Information Administration said.

Soaring output is putting the USA on course to become a net exporter of crude oil and petroleum products next year.

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Opec members vowed to cut 800,000 barrels a day of that amount, so January's figures fell just 3,000 barrels short of that commitment.

"Our primary objective is to ensure that the oil market remains in balance throughout 2019 and beyond in order to build on the success of the past couple of years", the OPEC Secretary General said. The dense crudes are much more hard to refine and tend to contain significant quantities of sulfur and other impurities that are costly to remove.

The Organisation of Petroleum Exporting Countries (Opec) said it tightened its crude taps to cut nearly 800,000 barrels a day from its oil exports in January after vowing to drain excess oil from the oversupplied market. The price has largely plateaued since then, in spite of the subsequent imposition of US sanctions. Venezuela's output is already at the lowest in decades as a spiraling economic crisis takes its toll on oil infrastructure. But a shortfall of heavy-sour crude can cause complications for many refiners, such as those along the U.S. Gulf Coast, configured to process it.

It said OPEC crude output was 930 thousand b/d lower in January at 30.83 million b/d, hitting a almost four-year low.

The cartel is broadly on track to keep markets balanced this year, even though demand for its crude will be lower than previously thought, the IEA's report indicated.

OPEC members along with allies including Russian Federation agreed in early December to trim production by 1.2 mbd from January 1, in a bid to eliminate a production glut and shore up prices.

Any economic slowdown could cap oil markets.