US economic pressure on Iran and Venezuela has deprived world oil markets of two large exporters. However, this gap has been filled by Russian supplies, earning its oil firms at least $905 million in cash, according to Bloomberg.
The demand for Russian crude has also been boosted by the output cuts imposed by the Organization of Petroleum Exporting Countries (OPEC) and allied major oil exporting states. The two factors reportedly allowed Russia’s Urals blend oil to gain leverage over Brent, the global benchmark against which Urals blend has traditionally traded at a discount.
Urals is heavy oil. It is a mix of the sour oil of the Urals and the Volga region with the light oil of Western Siberia. Analyst at JBC Energy, Konstantsa Rangelova, explained that sanctions on Iran and Venezuela had created a shortage of competing heavier, sourer crude. This brought the demand for Urals blend in the Mediterranean to “an all-time high.”
As of Thursday the blend was trading at $56.12 per barrel, while Brent neared $59 per barrel.
In January, Washington imposed sanctions targeting Venezuela’s state oil major PDVSA in a bid to put more pressure on the country’s President Nicolas Maduro. Oil revenues are vital to Venezuela’s budget. At the same time, the US has been actively supporting opposition leader Juan Guaido, who is calling for the overthrow of the elected president and proclaiming himself the country’s interim leader.
Last week, the US hit Caracas with a trade embargo. The new restrictions freeze all Venezuelan government assets in US jurisdictions and target individuals, companies, and countries doing business with Caracas.
The US has also been pressuring Iran, accelerating the efforts to bring the Islamic Republic’s crude exports to zero after Donald Trump pulled the US out of the landmark nuclear deal. Since that withdrawal last year, Washington has steadily reapplied economic sanctions on Tehran, targeting the country’s energy, shipping, banking, and military sectors.
Source: RT