Prospect for Venezuela’s Oil Return Pressures Heavy Crudes

Heavy crude prices are encountering sharp falls following the easing of sanctions on Venezuela, according to BNEF.

• Western Canadian Select is down by over $11/b, while Mexico’s Maya has declined by $3/b.
• This is despite the sanction relief already being jeopardised by a Venezuelan court’s decision to suspend the results of primary elections for the opposition, a violation of the agreement with the US requiring free elections.
• However, should the sanction relief be withdrawn, prices for alternative heavy crudes are expected to rebound.
• The scope for return of Venezuela’s oil onto the global market has done little to move the needle for Brent or WTI, which are relatively unchanged.