A view of the main deck of Tullow Oil's Floating Production, Storage and Offloading vessel. Picture: REUTERS
A view of the main deck of Tullow Oil's Floating Production, Storage and Offloading vessel. Picture: REUTERS

Sydney — US oil prices inched up on Tuesday, buoyed by the expectation of tightening global supply due to US sanctions on Venezuela and production cuts led by Opec.

US West Texas Intermediate (WTI) crude futures were at $54.77 a barrel at 2.23am GMT, up 21c or 0.4%. They closed down 1.3% on Monday, after earlier touching their highest since November 21 at $55.75 a barrel.

International Brent crude oil futures were at $62.72 a barrel, also up 21c, or 0.4%, after closing down 0.4% in the previous session.

Analysts said that US sanctions on Venezuela had focused market attention on tighter global supplies.

“Fresh US sanctions on the country could see 0.5%-1% of global supply curtailed,” said Vivek Dhar, mining and energy analyst, Commonwealth Bank of Australia.

The sanctions will sharply limit oil transactions between Venezuela and other countries and are similar to but slightly less extensive than those imposed on Iran in 2018, experts said on Friday after looking at details posted by the treasury department.

With fresh sanctions potentially looming, a flotilla loaded with about 7-million barrels of Venezuelan oil has formed in the Gulf of Mexico, some holding cargoes bought ahead of the latest US sanctions and others whose buyers are weighing who to pay, according to traders, shippers and Refinitiv Eikon data.

Meanwhile, oil supply from producer cartel Opec fell in January by the largest amount in two years, a Reuters survey found, as Saudi Arabia and its Gulf allies over-delivered on the group’s supply-cutting pact while Iran, Libya and Venezuela registered involuntary declines.

Russia has been in full compliance with its pledge to gradually cut its oil production, Russian Energy Minister Alexander Novak said in a statement on Monday, adding that production fell by 47,000 barrels a day in January from October.

Reuters