Kuwait sees risk of oil supply shortage in 2019 due to Venezuela

07 February, 2019, 00:53 | Author: Brooke Harris
  • OPEC supply fell in January by the largest amount in two years

Prices also dipped after data showed USA crude inventories at Cushing, Oklahoma, the delivery point for US crude futures, rose by more than 943,000 barrels in the week to February 1, traders said, citing data from market intelligence firm Genscape.

The European Union is considering imposing more sanctions on the government of Venezuelan President Nicolas Maduro but has not discussed an oil embargo, Malta's foreign minister said on Monday.

Meanwhile, most analysts expect USA sanctions targeting Venezuela's crude industry to sharply limit oil transactions between Caracas and other countries.

His comments come at a time when energy market participants expect US sanctions on crisis-stricken Venezuela, as well as OPEC-led production cuts, to offset a potential supply glut this year. U.S. West Texas Intermediate (WTI) crude was down 33 cents at $53.33.

“The 2019 demand outlook for oil is not great, while the prospects of increased shale supply and competition elsewhere could drive prices further lower, ” he said.

The official, who is also Venezuela's representative to OPEC, added that Caracas would do everything possible to minimise the effects of U.S. sanctions on the oil and gas giant on the market.

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Production cuts by members of the Organization of the Petroleum Exporting Countries and its allies, including Russian Federation, “continued to add tailwinds from the supply side of the market, while trade fears and concerns of a general slowing of global demand growth look to hold prices lower, ” said Robbie Fraser, global commodity analyst at Schneider Electric.

Hashem said OPEC+ actions should help re-balance the oil markets this year but he also warned of the impact of underinvestment in the oil industry which could cause a supply crunch by 2025.

OPEC, Russia and other non-OPEC producers - an alliance known as OPEC+ - agreed in December to reduce supply by 1.2 million barrels per day (bpd) from January 1.

Venezuela, like fellow OPEC members Iran and Libya, was exempt from production curbs under the deal on expectations that its output faced involuntary downward pressure in 2019. US Treasury Secretary Steven Mnuchin told reporters that by blocking PDVSA's assets, the United States was preserving the assets of the company in the interests of the people of Venezuela and also protecting its own market. Oil prices fell on Tuesday after a survey showed euro zone business expansion almost stalled in January.

U.S. President Donald Trump last week said he would meet his Chinese counterpart Xi Jinping in coming weeks to try to settle the two countries' dispute.

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