Oil prices rose on Tuesday amid worries that Venezuela’s crude output could drop further following a disputed presidential election in the country and with potential sanctions on the OPEC-member.
Brent crude futures were at $79.37 per barrel at 0110 GMT, up 15 cents, from their last close. Brent broke through $80 for the first time since November 2014 last week.
U.S. West Texas Intermediate (WTI) crude futures were at $72.49 a barrel, up 25 cents from their previous settlement.
“The markets’ positive take on ‘no trade war’ and Venezuela’s political woes are driving oil prices higher,” said Stephen Innes, head of trading for Asia-Pacific at futures brokerage OANDA in Singapore.
Venezuela’s socialist President Nicolas Maduro faced widespread international condemnation on Monday after his re-election in a weekend vote his critics denounced as a farce cementing autocracy in the crisis-stricken oil producer.
The United States is actively considering oil sanctions on Venezuela, where output has dropped by a third in two years to its lowest in decades.
“Tightening the economic screws will severely cripple … Venezuela’s ability to export while making it virtually impossible for the country to acquire dollars,” said Innes.
Meanwhile, Washington and Beijing both claimed victory on Monday as the world’s two largest economies stepped back from the brink of a global trade war and agreed to hold further talks to boost U.S. exports to China.
Elsewhere, concerns that looming U.S. sanctions on Iran will curb that country’s crude exports have also been boosting oil prices in recent weeks.
OANDA’s Innes said that and the impact of output curbs led by the Organization of the Petroleum Exporting Countries had created “ultra-tight” supply conditions, with any signs of supply disruption sending prices sharply higher.
“Supply-side dynamics are apparently in the driver’s seat, suggesting prices should push higher near-term,” he said.