Oil prices fell on Wednesday amid expectations of a surge in supply after United States President Donald Trump said Venezuela would hand over up to 50 million barrels of crude to the US.
According to oilprice.com, Venezuela and the United States reached a deal under which authorities in the South American country would agree to export the oil valued at $2bn to the US.
Brent crude dropped below $60 per barrel on Wednesday evening after Trump said “interim authorities” in Venezuela would be providing 30 million to 50 million barrels of “high quality” oil to the US at market price, thought to be worth close to $2bn.
The agreement with the US-compliant leadership in Venezuela would boost the supply of heavy crude to US Gulf Coast refineries and potentially further curb illicit Venezuela shipments of cheap crude to China, Reuters noted.
Venezuela’s state oil firm PDVSA has been unable to ship oil cargoes to Asia for nearly a week, as the US “oil quarantine” of Venezuela continues, shipping data reviewed by Reuters showed on Tuesday.
Chevron is the only Western oil company currently authorised by the US Treasury to operate in Venezuela. Chevron ships the crude to the US Gulf Coast. Venezuelan shipments to Asia, however, are at a standstill, and China, the top oil customer of Venezuela, is getting lower volumes of crude.
It was learnt that Chinese oil buyers have reduced their intake of Venezuelan oil as the discount between Brent and the country’s flagship Merey crude shrank from $15 per barrel last month to $13 per barrel now, according to Bloomberg.
