Economy
Crude Oil Market Soars as Traders Weigh Maduro’s Ordeal
By Adedapo Adesanya
The crude oil market was up by about a Dollar per barrel on Monday as traders assessed the possible impact on crude flows from Venezuela, home to the world’s largest oil reserves, following the capture of President Nicolas Maduro by the United States.
Brent crude gained $1.01 or 1.66 per cent to sell at $61.76 a barrel and the US West Texas Intermediate (WTI) crude appreciated by $1 or 1.74 per cent to $58.32 per barrel.
Investors digested news of President Maduro’s capture and that the US would take control of Venezuela, which is a founding member of the Organisation of the Petroleum Exporting Countries (OPEC), whose crude exports had been under a US embargo.
Venezuelan oil output has plummeted in recent decades, curbed by mismanagement and a lack of foreign investment after the nationalisation of oil operations in the 2000s. Output averaged about 1 million barrels per day last year, equating to about 1 per cent of global production.
It was reported that the US government would meet with oil companies, Exxon Mobil, ConocoPhillips, or Chevron Corp, to discuss Venezuelan oil production future.
Market analysts noted that Venezuelan production could rise by as much as 500,000 barrels per day over the next 18 months under improved political and investment conditions, a development that could further weigh on oil prices despite the likelihood of a response from OPEC and its allies (OPEC+) if inventories rise sharply.
US President Donald Trump has been very clear that the blockade of Venezuela and the capture of its president have been driven by the desire to revive Venezuela’s oil industry and regain what he alleges were stolen assets and oil.
President Trump also raised the possibility of further US interventions, suggesting Colombia and Mexico could face military action if they did not reduce the flow of illicit drugs.
Analysts are also awaiting Iran’s reaction to President Trump’s threat to intervene in a crackdown on protests in the OPEC producer.
