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Oil Hits Highest Levels in 2019 after Venezuela Sanctions, OPEC Cuts

Oil Hits Highest Levels in 2019 after Venezuela Sanctions, OPEC Cuts

Tuesday, 5 February, 2019 - 11:15
An oil pumpjack and a tank with the corporate logo of state oil company PDVSA are seen in an oil facility in Lagunillas, Venezuela January 29, 2019. (Reuters)
London - Asharq Al-Awsat
Oil prices jumped to their highest level in 2019 on Monday following expectations of a tightening of global supply due to US sanctions on Venezuela and production cuts led by OPEC.

Brent crude futures dropped 24 cents, or 0.38 percent, to settle at $62.51 a barrel. US West Texas Intermediate (WTI) crude futures fell 70 cents, or 1.27 percent, to settle at $54.56 a barrel.

Higher crude oil prices helped drag Asian refinery margins to their lowest levels since 2010 on Monday, Refinitiv data showed.

Output declines from the Organization of the Petroleum Exporting Countries (OPEC) as they make good on their pact to curb a supply overhang were compounded by falling US oil rig counts and sanctions on Venezuelan oil sales.

After examining details posted by the US Treasury Department, experts believe sanctions will sharply limit oil transactions between Venezuela and other countries and are similar to those imposed on Iran last year.

OPEC oil supply fell in January by the largest amount in two years despite sluggish production declines from Russia, according to a Reuters survey.

Russia did not meet its oil target for the output cuts, Energy Ministry data showed on Saturday.

Production last month dropped to 11.38 million barrels per day (bpd), but that was only down by 35,000 bpd from its October 2018 level that is the baseline for the pact.

Russia’s second-largest oil producer Lukoil said on Monday its oil output in 2018 remained roughly unchanged at 85.6 million tonnes, excluding production at Iraq’s West Qurna-2 oilfield.

Its production in Russia rose to 81.41 million tons from 81 million in 2017.

Lukoil’s natural gas production rose to 33.54 billion cubic meters (bcm) from 28.86 bcm in 2017.

In other news, Norwegian oil company Aker BP, partially owned by UK’s British Petroleum, has hit oil and gas at its exploration well in the North Sea offshore Norway. The company said that preliminary analysis indicates a gross discovery size of 45-153 million barrels oil equivalents.

The major part of the discovery is in license 869 on the Norwegian Continental Shelf, while a part is on the UK-Norwegian border.

Aker BP is the operator and holds 60 percent interest in license 869, with 20 percent owned by its partners Lundin Norway and Var Energi each.

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