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Oil prices rise as U.S. bans Chevron's export of Venezuelan crude

The oil prices rose in the early hours of trading on Wednesday, as the U.S. banned Chevron's exports from Venezuela due to a new authorization for its assets there. This raised the prospect of a tighter supply.

Brent crude futures gained 47 cents or 0.73% to $64.56 per barrel at 0028 GMT. U.S. West Texas Intermediate crude rose 49 cents or 0.8% to $61.38 per barrel.

Sources reported that the Trump administration had issued a new approval for U.S. giant Chevron, which would allow it to retain assets in Venezuela without allowing them to export oil or expand their activities.

Robert Rennie, Westpac's director of commodity and carbon strategies, wrote in a report that the loss of Chevron Venezuelan barrels will lead refiners to rely more on Middle Eastern crude.

The previous license had been revoked by the U.S. president Donald Trump on 26 February.

The licenses granted to Chevron, and other foreign oil companies in recent years have helped to support a small recovery of Venezuelan oil production that was hit by sanctions. This has risen to around 1 million barrels a day.

The European Union has begun to ask top EU companies about their U.S. investments plans. This is a sign that Brussels will be advancing trade negotiations with Washington. Trump's move comes after he backed down from his threat over the weekend to impose tariffs of 50% on European goods, which would have hurt demand for oil and economic activity.

The gains on Wednesday have largely recovered the losses of Tuesday when prices fell by around 1% following signs of limited progress in the fifth round of Iran and U.S. nuclear negotiations. The market anticipates that any resolution between Iran and the United States could increase Iranian oil supply on the market.

The Organization of the Petroleum Exporting Countries (OPEC+) and its allies will meet in full on Wednesday. However, no major policy changes are anticipated. Sources say that eight members of OPEC+ could decide on a July output increase when they meet this Saturday.

Rennie stated that the most likely scenario for July would be a 411,000 barrel increase per day. This would "add to the rising inventory as we approach the summer driving season here in the U.S."

(source: Reuters)