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Renewed Supply Concerns Push Oil Prices Up Above $80

May 22, 2018 at 15:38 by Matt Jackson

The prospect of supply disruption from Iran and Venezuela has helped push oil prices back up to around 3 1/2 -year highs with Brent crude trading above $80 per barrel and WTI at nearly $73 per barrel.

Elections in Venezuela this weekend saw President Nicolas Maduro secure a second six-year term, but his victory was accompanied by accusations of vote-buying and electoral fraud. Leaders around the world have condemned the election process. Maduro described it as a heroic and popular victory. Opposition leader, Henri Falcon, described the election as “illegitimate”. British foreign secretary, Boris Johnson, joined a host of foreign names threatening to “tighten the economic screen on Venezuela.”

The USA has imposed a host of new sanctions against the Venezuelan government, including barring citizens from purchasing any state-owned assets or debt. More importantly to the oil market, the order also applies to the PDVSA, which is the state-owned oil company. A senior US government executive said that they were making the move in order to protect Venezuelan citizens from the fire-sale of state assets. US citizens have already been banned from buying the Venezuelan cryptocurrency, PETRO, which is allegedly backed by barrels of the country’s oil.

Mike Pompeo, US Secretary of State, also announced that the nation would be imposing further sanctions against Iran, following the USA’s withdrawal from the nuclear deal. Although specific details of the sanctions have yet to be fully released, it will mean that Iran must withdraw its troops from Syria and end support for rebels in Yemen. Iran’s foreign minister, Javad Zarif, condemned the announcement, saying that the USA would suffer the consequences of its policies. The EU foreign policy chief, Federica Mogherini, also attacked the news, said that Pompeo had not shown how new sanctions and a withdrawal from the Iran nuclear deal would benefit the Middle East.

The threat of supply disruption in Iran and Venezuela has pushed oil prices up. WTI crude prices increased 0.59% to $72.78, while Brent crude pushed up 1.5% to $80.41 at 16:30 GMT.

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