Economy

Oil prices rise after OPEC cuts, U.S. sanctions on Iran, Venezuela

Oil prices rise after OPEC cuts, U.S. sanctions on Iran, Venezuela

West Texas Intermediate (WTI) crude rose by 46 cents or 0.4 per cent to settle at $63.84 a barrel.

The combined supply cuts have helped to drive a 32 percent rally in crude prices this year to almost $72 a barrel, prompting U.S. President Donald Trump to call on OPEC to ease its market-supporting efforts.

"Pressure to global supplies continues to mount because of sanctions-linked problems in Iran and Venezuela and rising geopolitical risk in Libya", said Stephen Innes, head of trading at SPI Asset Management.

In its latest monthly oil market report, the Paris-based IEA said production by OPEC kingpin Saudi Arabia dropped to its lowest level in two years in March after the cartel agreed to cuts with Russian Federation and other ex-Soviet states.

Current oil demand stands around 100 million bpd. Indicating that an ongoing price hike could prompt OPEC to promote a supply glut, an analyst at Price Future Group in Chicago, Phil Flynn said, "Now there is a suggestion that OPEC may surprise us and raise production pre-emptively if we get a price spike".

The group forecasts USA crude production to rise by 1.46 million bpd in 2019 to 12.42 million bpd.

More news: Final production C7 Corvette, a 2019 Z06, to be auctioned in June

According to the report, only time will tell if the EIA current demand forecast (1.4 mb/d) proves accurate, but the "risks are now to the downside".

Saudi Arabia has slashed its oil production by more than promised as part of a pact to boost oil prices, the International Energy Agency said Thursday, while warning of mixed signals for global demand.

OPEC and its allies meet in June to decide whether to continue withholding supply.

However the IEA warned that demand fell in developed OECD countries by 0.3 million barrels per day (mbd) in the last three months of 2018 - "the first such fall for any quarter since the end of 2014".

At the last OPEC meeting in Vienna, the group's members agreed to slash output by 812,000 bpd, with Russian Federation and nine other non-OPEC allies committing to a cut of 383,000 bpd for the first six months of 2019.

Two days ago, OPEC reported Venezuela's March output sank to 732,000 bpd, citing independent sources, while figures provided by the country put production at 960,000 bpd.