U.S. to release oil from reserves after OPEC+ rebuffs call for more crude

By Timothy Gardner

WASHINGTON (Reuters) -The United States said on Tuesday it would release millions of barrels of oil from strategic reserves in coordination with China, India, South Korea, Japan and Britain to cool prices after OPEC+ producers repeatedly ignored calls for more crude.

U.S. President Joe Biden, facing low approval ratings amid rising inflation ahead of next year’s congressional elections, has repeatedly asked the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, to pump more oil.

Tuesday’s announcement that the U.S. would release 50 million barrels was made after an official said Washington had approached major Asian energy consumers to help to drive down oil prices from near three-year highs. Britain had not previously been mentioned as being involved.

It was the first time Washington had coordinated such a move with some of the world’s largest oil consumers, officials said.

OPEC+, which includes Saudi Arabia and other U.S. allies in the Gulf, as well as Russia, has rebuffed requests to pump more at its monthly meetings. It meets again on Dec. 2 to discuss policy but has so far shown no indication it will change tack.

The group has been struggling to meet existing targets under its agreement to gradually increase production by 400,000 barrels per day (bpd) each month – a pace Washington sees as too slow – and it remains worried that a resurgence of coronavirus cases could once again drive down demand.

Current high prices have been caused by a sharp rebound in global demand, which cratered last year, early in the pandemic.

TALKING WITH PARTNERS

The release from the U.S. Strategic Petroleum Reserve would be in a loan and a sale to companies, U.S. officials said. The 32 million barrels loan will take place over the next several months, while the administration would accelerate a release of 18 million barrels in sales already approved by Congress.

“We will continue talking to international partners on this issue. The president stands ready to take additional action if needed, and is prepared to use his full authorities working in coordination with the rest of the world,” a senior U.S. administration official told reporters.

India said in a statement it would release 5 million barrels, while Britain said it would allow the voluntary release of 1.5 million barrels of oil from privately-held reserves.

South Korea said details on the amount and timing of the release of oil reserves would be decided after discussions with the United States and other allies.

Japanese media said Tokyo would announce its plans on Wednesday.

Benchmark Brent crude was trading above $80 a barrel on Tuesday, up from its levels before the announcement but still well below last month’s three-year high of more than $86.

The effort by Washington to team up with major Asian economies to lower energy prices sends a warning to OPEC and other big producers that they need to address concerns about high crude prices, up more than 50% so far this year.

Suhail Al-Mazrouei, energy minister of the United Arab Emirates, one of OPEC’s biggest producers, said before details of the release from U.S. reserves was announced that he saw “no logic” in lifting UAE supply for global markets.

An OPEC+ source said releasing reserves would complicate calculations for OPEC+, as it monitors the market on a monthly basis.

HEIGHTENED TENSION

“These developments point to a period of heightened political tensions between the world’s biggest consumers and OPEC+, which implies increased oil price volatility,” said Henning Gloystein at Eurasia Group.

The United States historically has worked on any coordinated stocks release with the Paris-based International Energy Agency (IEA), a bloc of 30 industrialized energy consuming nations.

Japan and South Korea are IEA members. China and India are only associate members.

Commerzbank analyst Carsten Fritsch described the U.S. release of 50 million barrels as “quite significant” and more than expected before the announcement. “The question is the time horizon of the release and how OPEC+ will react,” he added.

Under a swap from U.S. reserves, oil companies taking crude must return it – or the refined product – plus interest. Swaps are typically offered when oil firms face supply disruptions, such as a pipeline outage or damage from a hurricane.

Outright sales are less common. U.S. presidents have authorized emergency sales three times, most recently in 2011 during a war in OPEC member Libya. Sales also took place during the Gulf War in 1991 and after Hurricane Katrina in 2005.

(Reporting by Timothy Gardner in Washington; Additional reporting by Sonali Paul in Melbourne, Ghaida Ghantous in Dubai, Ahmad Ghaddar in London, OPEC team; Writing by Richard Valdmanis and Edmumd Blair; Editing by Carmel Crimmins and Alexander Smith)

Oil steady near $70/bbl on hopes of recovering demand

By Laura Sanicola

NEW YORK (Reuters) – Oil hovered near $70 a barrel on Friday, supported by production cuts by major oil producers and optimism about a demand recovery in the second half of the year.

Benchmark Brent fell 22 cents, or 0.3%, to $69.41 a barrel by 1:25 p.m. EST (1825 GMT) while U.S. West Texas Intermediate crude was at $65.85 a barrel, fell 17 cents, or 0.3%.

Brent is on track to end the week flat after prices touched a 13-month high on Monday, following seven straight weeks of gains.

“Demand for risky assets such as oil continues to be buoyed by the White House relief package and an almost daily flow of optimistic vaccine headlines,” said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois.

The Organization of the Petroleum Exporting Countries forecast a stronger oil demand recovery this year, weighted to the second half. OPEC, Russia and its allies decided last week to maintain its output curbs almost unchanged.

U.S. drillers are also holding back, cutting the number of oil and natural gas rigs operating for the first time since November, according to data from energy services firm Baker Hughes Co.

“The stronger-than-expected rebound in the second half of this year implies that the global economy and hence oil demand outlook is close to shaking off its COVID woes,” PVM analysts said.

RBC Capital analysts said the fundamentals for summer gasoline was the most bullish in nearly a decade.

The United States, world’s largest oil consumer, saw a big draw on U.S. gasoline stocks last week as the winter storm in Texas disrupted refining output.

Sustained higher oil prices are expected to encourage U.S. producers to increase output, which could eventually weigh on prices, JPMorgan analysts wrote.

JPMorgan expects U.S. oil output to average 11.36 million barrels per day this year compared with 11.32 million bpd in 2020.

Earlier this week, the government revised down 2021’s decline expected in U.S. crude production. Output is seen falling 160,000 bpd to 11.15 million bpd, a smaller decrease than its previous monthly forecast for a 290,000-bpd drop.

(Additional reporting by Shadia Nasalla, Florence Tan; Editing by Marguerita Choy and David Gregorio)

Oil jumps 2%, hits highest in year as producers limit supply

By Jessica Resnick-Ault

NEW YORK (Reuters) – Oil prices rose more than 2% on Tuesday, reaching their highest in 12 months after major producers showed they were reining in output roughly in line with their commitments.

The U.S. and global benchmarks rallied as optimism about more U.S. economic stimulus added to market bullishness from supply cuts.

Brent crude was up $1.22, or 2.2%, at $57.57 a barrel by 12:03 EST (1703 GMT) for its third straight day of gains, touching $58.05, the highest levels since January last year.

U.S. oil gained $1.26, or 2.3%, to $54.81, after touching a session high of $55.26, the highest in a year.

The rally began as OPEC production increases were less than expected.

OPEC crude production rose for a seventh month in January but the increase was smaller than expected, a Reuters survey found.

Voluntary cuts of 1 million bpd by OPEC’s de facto leader, Saudi Arabia, are set to be implemented from the beginning of February through March.

Russian output increased in January but is in line with the supply pact, while in Kazakhstan oil volumes fell for the month.

The rally picked up steam as the U.S. Congress looked ready to adopt an economic stimulus package, and as cold U.S. weather boosted heating oil demand.

“You got the U.S. economic stimulus package that no one thought we would get,” said Bob Yawger, director of energy futures at Mizuho in New York.

A cold snap and heavy snow in the U.S. northeast drove the margin for heating oil to an 8-month high of $15.88, lending further support to crude.

However, energy giant BP flagged a difficult start to 2021 amid declining product demand, noting that January retail volumes were down about 20% year on year, compared with a decline of 11% in the fourth quarter.

Oil demand is nevertheless expected to recover in 2021, BP said, with global inventories seen returning to their five-year average by the middle of the year.

(Additional reporting by Noah Browning and Aaron Sheldrick; Editing by David Evans, David Goodman and David Gregorio)

Oil drops 3% as U.S. vote count continues and coronavirus cases rise

By Jessica Resnick-Ault

NEW YORK (Reuters) – Oil fell below $40 a barrel on Friday as drawn-out vote counting in the U.S. presidential election kept markets on edge and new lockdowns in Europe to halt surging COVID-19 infections sparked concern over the demand.

In the U.S. election, Democratic presidential candidate Joe Biden took the lead over President Donald Trump in Georgia and Pennsylvania on Friday, edging closer to winning the White House as a handful of states continue to count votes.

Three days after polls closed, Biden has a 253 to 214 lead in the state-by-state Electoral College vote that determines the winner, according to Edison Research. Winning Pennsylvania’s 20 electoral votes would put the former vice president over the 270 he needs to secure the presidency.

Coronavirus cases in the United States surged by at least 120,276 on Thursday, according to a Reuters tally, the second consecutive daily record rise as the outbreak spreads in every region.

Italy recorded its highest daily number of COVID-19 infections on Thursday while cases surged by at least 120,276 in the United States, the second consecutive daily record as the outbreak spreads across the country.

Brent crude fell $1.28, or 3.13%, to $39.65 by 11:33 a.m. EST (1633 GMT). U.S. West Texas Intermediate (WTI) dropped $1.24, or 3.08% to $39.65 a barrel.

Still, Brent was heading for a 6% weekly gain, and U.S. crude was up 4.5% on the week.

Diminishing prospects of a large U.S. stimulus package were also weighing on the market.

U.S. Senate Majority Leader Mitch McConnell said on Friday that economic statistics including a 1 percentage point drop in the U.S. unemployment rate showed that Congress should enact a smaller coronavirus stimulus package that is highly targeted at the effects of the pandemic.

“Crude oil is very sensitive to the stimulus expectations, which just took a hit for the worse,” said Bob Yawger, director of energy futures at Mizuho. “The coronavirus situation is as negative a demand indicator as you can get,” he said.

Providing some support, the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, a group known as OPEC+, could delay bringing back 2 million barrels per day of supply in January, given weaker demand after new lockdowns.

U.S. crude inventories plunged last week by 8 million barrels, against analyst expectations for an increase.

(Additional reporting by Aaron Sheldrick; Editing by David Goodman and Louise Heavens)

IEA says oil demand recovery set to slow for rest of 2020

By Noah Browning

LONDON (Reuters) – The International Energy Agency (IEA) trimmed its 2020 oil demand forecast on Tuesday, citing caution about the pace of economic recovery from the pandemic.

The Paris-based IEA cut its 2020 outlook by 200,000 barrels per day (bpd) to 91.7 million bpd in its second downgrade in as many months.

“We expect the recovery in oil demand to decelerate markedly in the second half of 2020, with most of the easy gains already achieved,” the IEA said in its monthly report.

“The economic slowdown will take months to reverse completely … in addition, there is the potential that a second wave of the virus (already visible in Europe) could cut mobility once again.”

Renewed rises in COVID-19 cases in many countries and related lockdown measures, continued remote working and a still weak aviation sector are all hurting demand, the IEA said.

China – which emerged from lockdown sooner than other major economies and provided a strong prop to global demand – continues a strong recovery, while a virus upsurge in India contributed to the biggest demand drop since April, the IEA said.

Increasing global oil output and the downgraded demand outlook also mean a slower draw on crude oil stocks which piled up at the height of lockdown measures, it added.

The agency now predicts implied stock draws in the second half of the year of about 3.4 million barrels per day, nearly one million bpd less than it predicted last month, with July storage levels in developed countries again reaching record highs.

However, preliminary data for August showed industry crude oil stocks fell in the United States, Europe and Japan.

As output cuts eased among producers from the Organization of the Petroleum Exporting Countries (OPEC) and allies such as Russia, global oil supply rose by 1.1. million bpd in August.

After two months of increases, recovery among countries outside the OPEC+ pact stalled, with production in the United States falling 400,000 bpd as Hurricane Laura forced shut-ins.

(Reporting by Noah Browning; editing by Jason Neely)

Saudi oil output to recover in two or three weeks after attack: sources

A satellite image showing damage to oil/gas Saudi Aramco infrastructure at Abqaiq, in Saudi Arabia in this handout picture released by the U.S Government September 15, 2019. U.S. Government/DigitalGlobe/Handout via REUTERS

By Alex Lawler and Parisa Hafezi

LONDON/DUBAI (Reuters) – Saudi Arabia sought to calm markets on Tuesday after an attack on its oil facilities, with sources in the kingdom saying output was recovering much more quickly than initially forecast and could be fully back in two or three weeks.

International oil companies, fellow members of the OPEC oil cartel and global energy policymakers had heard no updates on the impact of the weekend attack from the Saudis for 48 hours, according to sources with knowledge of the situation.

And on Monday, sources briefed on state oil giant Aramco’s operations had said it could take months for output to recover.

The attack knocked out half of Saudi Arabia’s oil production, or 5% of global output, sending prices soaring when trading resumed on Monday. So the new prediction of a quick return to normal output sent prices down sharply on Tuesday.

The kingdom is close to restoring 70% of the 5.7 million barrels per day lost due to the attack, a top Saudi official said, adding that Aramco’s output would be fully back online in the next two to three weeks.

The Saudi energy minister will hold a news conference on Tuesday at 1715 GMT, giving what would be the first official update since Aramco announced on Sunday that attacks on its plants in Abqaiq and Khurais had knocked out 5.7 million barrels per day.

While the Houthi group, which is fighting a Saudi-led coalition in Yemen, was quick to claim responsibility for the attack, U.S. President Donald Trump blamed Iran. That accusation prompted Iran’s supreme leader on Tuesday to rule out talks with Washington.

NUCLEAR ACCORD

Trump said on Monday that it looked like Iran was behind the strike at the heart of the Saudi oil industry, but stressed he did not want to go to war. Iran denied it was to blame.

“Iranian officials, at any level, will never talk to American officials … this is part of their policy to put pressure on Iran,” Iranian state TV quoted Ayatollah Ali Khamenei as saying.

He said talks could only take place if the United States returned to a nuclear accord between Iran and the West that Trump abandoned last year.

U.S.-Iran relations deteriorated after Trump quit the accord and reimposed sanctions over Tehran’s nuclear and ballistic programs. He also wants Iran to stop supporting regional proxies, including the Houthis.

But a day after warning that the United States was “locked and loaded” to respond to the incident, Trump dialed down his rhetoric, saying on Monday there was “no rush” to do so and that Washington was coordinating with Gulf Arab and European states.

“I’m not looking at options right now. We want to find definitively who did this.”

Britain and Germany agreed they needed to work with international partners to form a collective response and de-escalate tensions as efforts continued to establish exactly what happened, Prime Minister Boris Johnson’s spokesman said.

German Chancellor Angela Merkel said the Iran nuclear pact, which European parties are trying to salvage, is one building block “we need to get back to”.

Saudi Arabia, which has supported tougher U.S. sanctions on Iran, said an initial investigation showed the strikes were carried out with Iranian weapons.

INVESTIGATION

Riyadh asked international experts to join its investigation, which indicates the attack did not come from Yemen, the foreign ministry said. U.S. officials say they believe it came from the opposite direction, possibly from Iran.

Iranian President Hassan Rouhani said Yemenis had launched the strikes in retaliation for attacks by a Saudi-led coalition that has been battling the Houthis for four years. Riyadh says Tehran arms the group, which has fired missiles and drones on Saudi cities, a charge both deny.

King Salman, heading a cabinet meeting on Monday, said Riyadh would handle the consequences of “cowardly attacks” that target vital Saudi installations, world crude supplies and global economic stability. The cabinet urged the world to confront those threats “regardless of their origin”.

The assault damaged the world’s biggest crude oil processing plant, triggering the largest jump in oil prices in decades. It was the worst such attack on regional oil facilities since Saddam Hussein torched Kuwait’s oil wells during the 1990-91 Gulf war.

However, dollar-denominated bonds issued by the Saudi government and Aramco rebounded on Tuesday, in a sign investors’ concern may be abating.

Trump said he was sending Secretary of State Mike Pompeo to Saudi Arabia soon, but he had not made any commitments to protect the Saudis. “That was an attack on Saudi Arabia, and that wasn’t an attack on us. But we would certainly help them.”

(Reporting by Parisa Hafezi and Steve Holland; Additional reporting by Reuters teams in London, Dubai, Riyadh, Cairo, Berlin, Paris, Singapore and New Delhi; Writing by Ghaida Ghantous; Editing by Giles Elgood and Andrew Cawthorne)

Explainer: How the Saudi attack affects global oil supply

A worker fills up a car at a gas station in Riyadh, Saudi Arabia September 16, 2019. REUTERS/Stringer

LONDON (Reuters) – The strike on the heartland of Saudi Arabia’s oil industry, including damage to the world’s biggest petroleum-processing facility, has driven oil prices to their highest level in nearly four months.

Here are some facts about the impact on oil supply and spare capacity:

WHY IS IT SO DISRUPTIVE FOR GLOBAL OIL SUPPLIES?

The attack on Saudi oil facilities on Saturday not only knocked out over half of the country’s production, it also removed almost all the spare capacity available to compensate for any major disruption in oil supplies worldwide.

The attack cut 5.7 million barrels per day (bpd) of Saudi crude output, over 5 percent of the world’s supply. But the attack also constrained Saudi Arabia’s ability to use the more than 2 million bpd of spare oil production capacity it held for emergencies.

The kingdom has for years been the only major oil-producing country that has kept significant spare capacity that it could start up quickly to compensate for any deficiency in supply caused by war or natural disaster.

Most other countries cannot afford to drill expensive wells and install infrastructure, then maintain it idle.

Before the attack, the Organization of the Petroleum Exporting Countries (OPEC) global supply cushion was just over 3.21 million barrels per day (bpd), according to the International Energy Agency (IEA).

Saudi Arabia – the de facto leader of OPEC – had 2.27 million bpd of that capacity. That leaves around 940,000 bpd of spare capacity, mostly held by Kuwait and the United Arab Emirates. Iraq and Angola also have some spare capacity. They may now bring that production online to help plug some of the gap left by Saudi Arabia – but it won’t be enough.

HAVEN’T OPEC AND ITS ALLIES BEEN CUTTING OUTPUT? CAN’T THEY JUST REVERSE THOSE CUTS?

Yes, OPEC and its allies such as Russia have cut output to prevent prices from weakening because the market has been oversupplied.

Those cuts aimed to reduce supply by 1.2 million bpd. But much of that was from Saudi Arabia so it now cannot be reversed quickly.

Non-OPEC members such as Russia are pumping near capacity, with perhaps only 100,000-150,000 bpd of available additional production.

WHAT ABOUT IRAN?

Iran holds spare capacity but it cannot get the oil to market because of sanctions imposed by the government of U.S. President Donald Trump.

Iran’s exports have fallen over 2 million bpd since April.

Washington has said Iran was behind Saturday’s attack, so is unlikely to ease sanctions to allow Iran to plug a gap it believes was created by Tehran.

Iran, for its part, said after the attack that it would pump at full volume if sanctions were eased.

AND VENEZUELA?

U.S. sanctions have also impacted the Venezuelan oil industry. But Venezuelan output has been in free fall for years and state oil company PDVSA is unlikely to be able to boost production much even if sanctions were eased.

WHAT ABOUT U.S. SHALE? CAN SHALE PRODUCERS PUMP MORE?

The United States has become the world’s top crude producer after years of rapid growth in supply from the shale sector, much of it pumped from fields in Texas. The U.S. has also grown as an exporter and shipped more crude to international markets in June than Saudi Arabia.

Shale producers can move quickly to pump more when prices rise and can bring production online in a matter of months. That is a much faster timeline than most traditional oil production.

If the Saudi outage looks like it will be prolonged and oil prices rally significantly, then shale producers will raise output.

But even if shale producers pump more, there are constraints on how much the United States can export because oil ports are already near capacity.

(Graphic: U.S. Oil Production png, https://fingfx.thomsonreuters.com/gfx/editorcharts/OIL-PRODUCTION-US/0H001PBVH68N/eikon.png)

SO WHAT HAPPENS NOW? WHAT ABOUT OIL IN STORAGE?

It all depends on how long the outage lasts.

Saudi Arabia, the United States and China all have hundreds of millions of barrels of oil in strategic storage. That is the storage that governments keep for exactly this scenario – to compensate for unexpected outages in supply.

They can release oil from strategic storage to meet demand and temper the impact on prices. U.S. President Donald Trump said on Sunday he had authorized a release from the U.S. Strategic Petroleum Reserve.

The IEA, which coordinates energy policies of industrialized nations, advises all its members to keep the equivalent of 90 days of net oil imports in storage.

Oil from storage should keep the market supplied for some time, but oil markets will likely become increasingly volatile as storage is run down and the possibility of a supply crunch rises.

The IEA said on Saturday the markets were still well supplied despite the Saudi disruptions.

“We are massively oversupplied,” said Christyan Malek, head of oil and gas research for Europe, Middle East and Africa at J.P. Morgan, adding it would take five months of a 5 million-bpd outage to take global crude supply levels back to a 40-year normal average.

“Having said that, this attack introduces a new, irreversible risk premium into the market,” he added.

WHAT HAPPENS IF THERE IS ANOTHER SUPPLY DISRUPTION?

With no spare capacity, future disruptions would cause oil prices to rise. A higher price over time will encourage producers to invest and pump more, while at the same time reducing consumption.

OPEC member Libya is in the middle of a civil war, which threatens its ability to continue pumping oil. Another big Libyan disruption would add to the shocks and highlight the lack of spare capacity.

Nigerian exports have also suffered from disruptions.

Even before the Saudi attack, spare capacity was falling. Consultancy Energy Aspects has said it expects OPEC spare capacity to fall to below 1 million bpd in the fourth quarter from two million bpd in the second quarter of 2019.

(Reporting by Dmitry Zhdannikov, Ron Bousso and Alex Lawler; Writing by Dmitry Zhdannikov and Simon Webb; Editing by Daniel Wallis)

U.S. removed almost 2.7 million barrels daily of Iranian oil from market: Pompeo

FILE PHOTO: U.S. Secretary of State Mike Pompeo reacts as he talks to the media after his meeting with Lebanon's Prime Minister Saad al-Hariri at the State Department in Washington, U.S., August 15, 2019. REUTERS/Yuri Gripas

WASHINGTON (Reuters) – The United States has removed nearly 2.7 million barrels of Iranian oil from global markets daily as a result of Washington’s decision to reimpose sanctions on all purchases of Iran’s crude, U.S. Secretary of State Mike Pompeo said on Tuesday.

In an interview with MSNBC, Pompeo said the U.S. government was confident it could continue with its strategy.

The United States re-imposed sanctions on Iran in November after pulling out of a 2015 nuclear accord between Tehran and six world powers. In May, Washington ended sanction waivers given to importers of Iranian oil, aiming to cut Tehran’s exports to zero.

Iran exported about 100,000 bpd of crude in July, according to an industry source who tracks such flows and data from Refinitiv Eikon. If condensate, a light oil, is included, shipments were about 120,000 bpd a day.

“We have managed to take almost 2.7 million barrels of crude oil off of the market, denying Iran the wealth to create their terror campaign around the world, and we have managed to keep the oil markets fully supplied,” Pompeo said.

“I am confident we can continue to do that,” he added.

The Organization of the Petroleum Exporting Countries (OPEC), Russia and other producers have been cutting 1.2 million bpd since Jan. 1 to reduce global supply. OPEC in July renewed the pact until March 2020 to avoid a build-up of inventories as worldwide demand is seen weakening.

Despite OPEC’s actions along with U.S. sanctions on Iran and Venezuela, Brent crude international oil prices <LCOc1> have been relatively weak, falling on Tuesday to $59 a barrel from a 2019 high of $75, pressured by concerns about slowing demand.

The exact level of Iranian exports has become harder to assess since U.S. sanctions returned in November, meaning estimates fall into a range rather than a definitive figure.

 

(Reporting by Humeyra Pamuk and Doina Chiacu in Washington; Editing by Paul Simao)

Rule of law has crumbled in Venezuela: jurists’ group

FILE PHOTO: Venezuela's President Nicolas Maduro greets people next to his wife Cilia Flores during a rally in support of the government in Caracas, Venezuela May 20, 2019. REUTERS/Ivan Alvarado/File Photo

By Stephanie Nebehay

GENEVA (Reuters) – The rule of law has crumbled in Venezuela under the government of President Nicolas Maduro which has usurped the powers of the legislative and judicial branches, an international legal watchdog said on Monday.

The International Commission of Jurists (ICJ) called on Venezuelan authorities to reinstate democratic institutions as part of a solution to the political, economic and humanitarian crisis engulfing the OPEC member.

The government and a compliant Supreme Court effectively stripped the National Assembly of most powers after the opposition won a majority in 2015 elections.

Lawmakers loyal to Maduro generally do not attend the sessions but go to meetings of the Constituent Assembly, a legislative body that meets in the same building.

The Constituent Assembly, created in a 2017 election boycotted by the opposition, is controlled by the ruling Socialist Party and its powers supersede the National Assembly.

Sam Zarifi, ICJ secretary-general, presented its latest report on Venezuela: “No Room for Debate”.

“The focus of this report is on the usurpation of the authority of the legislative by the government in Venezuela. This comes after the judiciary was taken over,” he told a news briefing.

“It seems quite clear that in response to the loss of direct support in the legislative assembly, the government decided to completely trample on the principle of the rule of law really and separation of powers,” he said.

The Constituent Assembly was “formed improperly and illegitimately” and has gone far beyond its stated role, Zarifi said, adding: “In fact it seemed to do everything but really discuss a new Constitution”.

Rafael Chavero Gazdik, a professor of constitutional law at Universidad Central de Venezuela, said that the new body had not produced any work on a new draft charter.

“Basically it is a body that is helping the President to do whatever he wants without the rule of law,” he said.

“After two years we have not seen in Venezuela a single draft of any article for a new Constitution – not a single one.”

After their parliamentary immunity was stripped, four lawmakers of the National Assembly are in jail and another 22 have fled Venezuela, Chavero said.

Venezuela’s opposition will meet with representatives of Maduro’s government in Barbados for talks mediated by Norway, the parties involved said on Sunday, as part of efforts to resolve the political crisis.

Opposition leader Juan Guaido, recognized as Venezuela’s rightful leader by more than 50 governments, invoked the constitution in January to assume a rival presidency.

“Addressing the problem of the National Constituent Assembly is a crucial step in any political solution to the crisis that has gripped Venezuela,” ICJ’s Zarifi said, urging the government to engage with the opposition-led legislature.

(Reporting by Stephanie Nebehay; Editing by Andrew Cawthorne)

Oil prices hit 2019 highs on OPEC cuts and U.S. sanctions

FILE PHOTO: Pumpjacks are seen against the setting sun at the Daqing oil field in Heilongjiang province, China December 7, 2018. REUTERS/Stringe

By Dmitry Zhdannikov

LONDON (Reuters) – Oil prices rose to new 2019 highs on Tuesday, supported by OPEC supply cuts and falling output from Iran and Venezuela because of U.S. sanctions.

Brent crude oil futures were up 16 cents at $67.70 a barrel at 1415 GMT, having earlier risen to a 2019 peak of $68.20, their highest since November 2018.

U.S. West Texas Intermediate (WTI) futures were at $59.17, up 8 cents from their last settlement. They also touched their highest since November at $59.57.

The Organization of the Petroleum Exporting Countries on Monday scrapped its planned meeting in April, effectively extending supply cuts that have been in place since January until its next regular meeting in June.

OPEC and a group of non-affiliated producers including Russia, known as OPEC+, cut supply in 2019 to halt a sharp price drop that began in the second-half of 2018 on booming U.S. production and fears of a global economic slowdown.

Saudi Arabia has signaled that OPEC and its allies could continue to restrain oil output until the end of 2019.

“The OPEC+ deal has brought stability to crude prices and signs of an extension have taken crude higher,” said Alfonso Esparza, senior market analyst at futures brokerage OANDA.

Prices have been further supported by U.S. sanctions against oil exports from Iran and Venezuela, traders said.

Venezuela has suspended its oil exports to India, one of its key export destinations, the Azeri energy ministry said on Tuesday, citing Venezuela’s oil minister.

Because of the tighter supply outlook for the coming months, the Brent forward curve has gone into backwardation since the start of the year, meaning that prices for immediate delivery are more expensive than those for dispatch in the future. May Brent prices were around $1.20 a barrel more expensive than for December delivery.

(GRAPHIC: Brent crude oil forward curves – https://tmsnrt.rs/2FlM7YZ)

Outside OPEC, analysts are watching U.S. crude oil production that has risen by more than 2 million barrels per day (bpd) since early 2018, to about 12 million bpd, making the United States the world’s biggest producer ahead of Russia and Saudi Arabia.

Weekly output and storage data will be published by the Energy Information Administration (EIA) on Wednesday.

Bank of America Merrill Lynch said that economic “risks are skewed to the downside” and it is forecasting global demand growth of 1.2 million bpd year on year in 2019 and 1.15 million bpd in 2020.

The bank said it expects Brent and WTI to average $70 and $59 a barrel respectively in 2019 and $65 and $60 a barrel in 2020.

(Reporting by Henning Gloystein; Editing Joseph Radford and David Goodman)