Oil pares gain as IEA discusses ways to tackle Venezuela risks
LONDON (Bloomberg) -- Oil traded near $71/bbl, paring earlier gains, as the International Energy Agency said it’s in talks with producing nations to step in should sanctions be imposed on Venezuela, resulting in a supply shortfall.
Futures in New York rose 0.2%. The IEA expects some of the biggest oil-producing nations to step in to ease any deficit after President Nicolas Maduro’s victory in Venezuela increases the prospect of U.S. sanctions against the nation’s already struggling energy industry. The assurance comes amid mounting tensions in the Middle East and U.S. President Donald Trump reimposing sanctions on Iran.
Crude in both New York and London are heading for a third monthly gain, reaching levels not seen for more than three years. Saudi Arabia and the United Arab Emirates have said they are ready to plug any supply gaps, while Russia remains cautious about the sustainability of the price rally.
“Venezuela is the major risk for the oil markets for the next weeks or months to come,” IEA Executive Director Fatih Birol said in a Bloomberg TV interview. “I have been discussing with key oil ministers from the major oil-producing countries” and expect them to “contribute to the solution of this looming problem in the markets,” whether it’s lost supply from Venezuela or Iran.
West Texas Intermediate for June delivery, which expires on Tuesday, rose 16 cent to $71.44/bbl on the New York Mercantile Exchange at 8:57 a.m. local time. Total volume traded was about 21% below the 100-day average. The more actively traded July contract was at $71.46.
Brent futures for July settlement were 28 cents lower at $78.23/bbl on the London-based ICE Futures Europe exchange, and traded at a $6.76 premium to WTI for the same month.
Yuan-denominated futures dropped 0.8% to 482.4 yuan a barrel on the Shanghai International Energy Exchange.
Following developments
The IEA is “following the developments in the oil markets very closely and we are ready to act if and when it is at all necessary,” Birol said. Besides Venezuela, there are also supply concerns from Iran after U.S. President Donald Trump this month said he’s reimposing sanctions on Middle eastern nation.
America and China agreed to “substantially” reduce the U.S.’s trade deficit in goods with the Asian nation after two days of negotiations. Both sides agreed on “meaningful increases” in U.S. energy and agriculture exports, which soothed the nerves of investors worried that the two major economies were on the verge of an all-out trade war.
