NEW YORK - Oil prices strengthened on Monday, with U.S. crude hitting new multi-year highs, amid rising concerns about Venezuela's crude output following the country's election.
Crude prices hovered near 2014-highs early Monday, bolstered by worries about production from OPEC members Iran and Venezuela.
The market firmed further ahead of settlement as U.S. President Donald Trump had discussions with Russia and China about issuing new debt to Venezuela. Trump signed an executive order on Monday restricting Venezuela's ability to liquidate state assets, a senior administration official told Reuters.
Geopolitical concerns that U.S. sanctions on Iran could curb the country's crude exports have led crude prices to trade higher in recent weeks, and the market is now weighing the possibility of additional sanctions on Venezuela following the country's presidential election. Additionally, a trade war between the U.S. and China was declared "on hold."
Brent crude futures <LCOc1> gained 55 cents to trade at $79.06 by 2:19 p.m. EDT [1819 GMT], having retreated to $78.10 earlier in the session.
U.S. crude futures <CLc1> were up 91 cents at $72.19 after touching $72.33, the highest since November 2014.
Brent pushed past $80 a barrel last week for the first time since 2014, and the market may again try to clear that hurdle, said Gene McGillian, vice president of research at Tradition Energy in Stamford, Connecticut.
"It seems as if the pull backs are just short-term profit taking and we will see whether people are going to be willing to drive the market through $80 again," he said.
The strength came as U.S. Secretary of State Mike Pompeo's remarks on Iran strategy showed that the United State was after regime change in the Islamic Republic, a senior Iranian official told Reuters.
Venezuela's socialist President Nicolas Maduro faced widespread international condemnation on Monday after his re-election in a weekend vote his critics denounced as a farce cementing autocracy in the crisis-stricken oil producer.
The United States is actively considering oil sanctions on Venezuela, where output has dropped by a third in two years to its lowest in decades. <PRODN-VE>
"The spectre of U.S. oil sanctions on the embattled Latin American producer now looms large as Washington strives to tighten the financial noose," PVM Oil Associates strategist Stephen Brennock said in a note.
A possible U.S. trade war with China is "on hold" after the world's two largest economies agreed to drop their tariff threats while they work on a wider trade agreement, U.S. Treasury Secretary Steven Mnuchin said on Sunday, giving global markets a lift in early Monday trade.
Stabilizing trade relations between the countries could boost oil demand, Tradition's McGillian said.
Rising output from U.S. shale and key OPEC producers could end the rally, BP <BP.L> Chief Executive Bob Dudley told Reuters. Dudley said he expected a flood of U.S. shale and a possible reopening of OPEC taps to cool oil markets after crude rose above $80 a barrel last week.
Dudley said he saw oil prices falling to between $50 and $65 because of surging shale output and OPEC's capacity to boost production to cover a potential shortfall in Iranian supplies owing to U.S. sanctions.