Oil markets woke from a five-month slumber with prices hitting a 2019 high above $69 a barrel after Saudi Arabia cut more than it had agreed with the Organization of the Petroleum Exporting Countries (OPEC) and its allies.
On Tuesday, Brent crude grew 0.42 percent to $69.30 per barrel by 09:58 GMT, briefly touching $69.50, the highest since mid-November. WTI Crude Oil was up 0.65 percent at $61.99 per barrel after rising above $62 for the first time since early November.
Apart from the significant cutback from Saudi Arabia, crude prices received a significant boost from pending sanctions against Iran and potential disruption in Venezuelan oil production due to sanctions pressure on the country’s energy sector. Washington is mulling more penalties against the Islamic Republic, whose crude exports have dropped more than twofold due to existing measures, according to an official as quoted by Reuters.
Further declines in supply from Iran and Venezuela might magnify the effects of oil production cuts agreed by OPEC-members and allied producers in late 2018. The measure, aimed at preventing a price-sapping rise in inventories, came into force in January.
Last month, oil supplies from OPEC-producers hit a four-year low due to the excessive production cuts by Saudi Arabia, a survey carried out by Reuters reveals. In April, the oil-rich kingdom is expected to slash export supplies by a further 10 percent, according to analysts at HFI Research. The reduction could send shockwaves through the oil market, as global refinery maintenance season officially concludes at the end of April.