Oil prices increased over 1 percent on Friday as turmoil in Venezuela raised concerns that oil exports could soon be disrupted, Reuters reported.
Washington on Thursday signaled that it could impose sanctions on crude exports of Venezuela as the capital falls further into economic as well as political turmoil.
At the early hours trading Friday, U.S. West Texas Intermediate (WTI) crude futures were up 1.5 percent or 77 cents, closing at $53.90 a barrel.
International Brent crude oil futures closed at $61.89 per barrel, rising 1.3 percent or 80 cents from their last close.
Earlier this year, in the midst of violent street protests, Juan Guaido, opposition leader of Venezuela declared himself the interim president, wining support Washington and large parts of Latin America, prompting the country’s leader Nicolas Madura to break relations with the US.
Sanctions on Venezuelan crude which is under consideration at the White House would hard hit refiners in Texas and Louisiana, Bloomberg reported, a move that would leave American oil companies struggling to find alternative supplies.
These companies have also urged the Trump administration not to limit imports of Venezuela crude, as the action could disadvantage refiners of Gulf and East Coast designed to monitor the U.S’s heavy crude, while also causing gasoline prices to rise.
According to the Reuters news, global oil markets, however, are still well supplied owing to increasing output in the United States, where the production of crude surged by over 2 million barrels per day (bpd) in 2018 to a record 11.9 million bpd.
Britain’s Barclays said on Thursday in a note that the record crude production in the US would possibly counteract any short-term disruptions to Venezuela export due to possible US sanctions. The bank has cut its 2019 average Brent crude oil estimates to $70 per barrel, down from earlier forecast of $72.
Surge in the U.S. output has resulted in expanding U.S. crude oil inventories, Reuters reported.
Gasoline stocks climbed for an 8th consecutive week to January 18, by 4.1 million barrels to a record 259.6 million barrels, Reuters reported Thursday, citing the U.S. Energy Information Administration (EIA). In addition, the fuel inventories surged by 8 million barrels.