Oil prices rise on ongoing Venezuelan supply trouble

WTI Crude Oil

Washington was anxious that the sanctions would curb deliveries from Iran and push oil prices up, the sources said.

The U.S. government had also unofficially asked Saudi Arabia and some other OPEC producers to raise output a day before Washington slapped new sanctions on Tehran. Fuel inventories also rose.

Riyadh took this line partly because higher crude prices could help the stock market float of a stake in state oil giant Saudi Aramco expected to take place in 2019, Saudi industry sources had told Reuters.

Oil headed for its first weekly gain since mid-May as investors weighed mixed signals from OPEC members about whether the group and its allies will increase output.

Sanctions on Iran's crude exports displaced more than 1 MMBPD from global markets under President Obama, who garnered worldwide support for the penalties. Global oil supply has tightened with the OPEC-led production cuts that began in January 2017. The top three producers previous year were Russian Federation with daily production of 10.35 million barrels, Saudi Arabia with 9.96 million barrels and the United States with 9.36 million barrels.

U.S. West Texas Intermediate pooh-poohed the report, ending Tuesday's session up 77 cents, or 1.2%, at $65.52 a barrel, rallying from a almost two-month low of $64.22/Bbl earlier in the session, Kallanish Energy reports.

Brent crude futures added 25 cents, or 0.33 percent, to $75.53 a barrel by 0717 GMT, after settling down 2 percent at $75.29 on Monday. In post-settlement trade, Brent turned positive, rising 18 cents a barrel. USA light crude was down 15 cents at $65.37.

The Organization of the Petroleum Exporting Countries and Russian Federation will meet on June 22-23 to decide how much production they will increase as global inventories have tightened while Venezuela's production has dropped more than expected.

OPEC and non-member producers led by Russian Federation had agreed to curb output by about 1.8 million barrels per day until the end of 2018 to reduce global stocks, but the inventory overhang is now near OPEC's target. In 2015, Tehran refused to sign up to OPEC policies, saying it needed to hike output due to the easing of sanctions after a nuclear accord with world powers. Its output has been hampered by inadequate investment, mismanagement and US sanctions. Since then, prices have receded about 8% as the Organization of Petroleum Exporting Countries and its allies flirt with the possibility of easing their supply curbs as USA shale producers continue to pump record volumes.

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