The price of OPEC basket of fourteen crudes stood at $49.97 a barrel on Monday, compared with $49.46 the previous Friday, according to OPEC Secretariat calculations.
This comes as oil rose Monday morning as news of possible US sanctions began to spread, encouraging market bulls to hope for prices rising back into the mid-$50s for the first time since early 2017.
In response to Venezuela’s controversial vote on Sunday, the United States is seriously considering placing sanctions on the Venezuelan oil industry, according to officials within the Trump Administration.
The impact of US sanctions could be far-reaching. If Venezuelan exports are affected and the country is forced to cut the price of its crude, large customers of Venezuela like China and India could profit from lower prices, as the country discounts its exports in order not to lose market share.
The crisis in Venezuela and falling oil production tied to US sanctions could lead to a rise in prices, which will benefit other produces as well as US shale.
Barclays estimated that US sanctions on Venezuela could raise prices by as much as $7. A collapse in the country’s oil sector, both as a result of sanctions and spiraling economic conditions, could jump-start prices in a more immediate, effective manner than the months-long OPEC strategy of organized production caps and allow the current rally to continue.
The OPEC Reference Basket of Crudes (ORB) is made up of the following: Saharan Blend (Algeria), Girassol (Angola), Oriente (Ecuador), Zafiro (Equatorial Guinea), Rabi Light (Gabon), Iran Heavy (Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Qatar Marine (Qatar), Arab Light (Saudi Arabia), Murban (UAE) and Merey (Venezuela).