Oil prices rose to their highest levels since late-2014 on May 7, boosted by fresh troubles for Venezuelan oil company PDVSA and a looming decision on whether the U.S. will re-impose sanctions on Iran.
Brent crude oil futures were at $75.78 a barrel at 1236 GMT, up 91 cents from their last close. Earlier in the session they touched their highest since November 2014 at $75.91.
U.S. West Texas Intermediate (WTI) crude futures rose 85 cents to $70.57, the first time since November 2014 that WTI had climbed above $70.
China’s Shanghai crude oil futures, launched in March, broke their dollar-converted record high, touching $72.54 on May 7.
U.S. oil major ConocoPhillips has moved to take key Caribbean assets of state-run PDVSA to enforce a $2 billion arbitration award, Reuters reported, potentially dealing a further blow to the Venezualan company’s declining oil output and exports.
The news helped to blunt the impact of a rising U.S. oil rig count reported by energy services firm Baker Hughes on May 4.
“The growth in production in the U.S. is being counterbalanced by the simultaneous decline in Venezuela,” said Commerzbank analyst Carsten Fritsch.
Venezuela’s output has halved since the early 2000s to 1.5 million barrels per day (bpd), hit by a lack of investment in the South American country’s oil industry.
Saudi Arabian Energy Minister Khalid al-Falih, meanwhile, said he was concerned about possible shortages of spare crude oil production capacity.
Also boosting prices is the widespread expectation that U.S. President Donald Trump will withdraw from the Iranian nuclear pact. Trump has a May 12 deadline to determine whether to extend sanction waivers.
“It seems that the bureaucratic wheels are turning in Washington to prepare for a sanctions snapback,” RBC Capital Markets analyst Helima Croft said in a note, adding that “the extraterritorial nature of U.S. sanctions, which cover energy, shipbuilding, finance, trade, insurance, etc., means that ... Iran’s oil exports could credibly be curtailed by 200,000 bbl/d to 300,000 bbl/d.”
Russian Energy Minister Alexander Novak also pledged Russia’s 100% compliance in May with an OPEC-led pact to reduce production.
But U.S. output has soared by more than a quarter in the past two years to 10.62 MMbbl/d and is likely to rise further this year as energy companies keep drilling.