US Sanctions on Venezuela Oil Will Push Brent to $70/bbl - GIQ Feb Energy Market Survey

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US Sanctions on Venezuela Oil Will Push Brent to $70/bbl - GIQ Feb Energy Market Survey

Image Attribute: Workers climbing on an oil storage of Petróleos de Venezuela, S.A.(the Venezuelan state-owned oil and natural gas company) / Creative Commons

Image Attribute: Workers climbing on an oil storage of Petróleos de Venezuela, S.A.(the Venezuelan state-owned oil and natural gas company) / Creative Commons

Dubai - March 6, 2019 (Gulf Intelligence): International intervention into the political crisis in Venezuela will place upward pressure on oil prices in the coming months, according to 81% of those polled in GIQ’s monthly Energy Market Survey in February and US sanctions on Venezuela’s oil exports will push Brent crude prices to the $70/bbl mark in the first quarter, 69% of respondents said.

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Venezuela’s oil exports have dropped 40% in the first full month after U.S. sanctions designed to oust Socialist President Nicolas Maduro, were initiated in early February. On January 28, President Trump’s administration barred U.S. customers from paying for Venezuelan crude oil until a new government being formed by the nation’s Congress head Juan Guaido, could be established.  The directive was then extended beyond simply barring U.S. companies from buying Venezuelan oil – and applied to all companies using the U.S. financial system to do business with PDVSA - resembling similar sanctions measures targeting Iran. The market paid attention, with Vitol and Trafigura last month, for example, saying they would comply with all U.S. sanctions.

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However, despite the US sanctions as well as strong compliance by the OPEC+ group to their agreement to cut output by 1.2 million b/d through to June 2019, Brent has so far held below $70/bbl, sitting comfortably in the mid-$60s since the start of the year.

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However, despite the US sanctions as well as strong compliance by the OPEC+ group to their agreement to cut output by 1.2 million b/d through to June 2019, Brent has so far held below $70/bbl, sitting comfortably in the mid-$60s since the start of the year.

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Meanwhile, OPEC’s exports to the US fell to a five year low in January and 88% of GIQ respondents see this trend continuing. US shale output has increased 140% since 2008 and some are now forecasting that the country could be a net exporter of crude and refined products by as soon as 2020. The EIA estimated that US oil output hit 12 million b/d in mid-February whereas most recent estimates had been predicting that this level would not be reached until the second half of the year.