This week, things got worse.
The driver of Friday's trading activity was said to be the US signalling that it may impose sanctions on Venezuelan exports after recognizing opposition leader Juan Guaido as interim president this week, prompting president Nicholas Maduro to cut ties with Washington. Venezuela, owner of the world's biggest oil reserves, could see crude production drop by a third this year, analysts at Fitch Solutions said Friday.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $52.44 per barrel, 18 cents lower from their last close.
Sanctions could also include US exports of petroleum products to Venezuela that are used for blending with Venezuelan heavy crude.
Oil prices edged up on Friday as turmoil in Venezuela increased the chances of tighter global supply if the United States makes good on signals that it could impose sanctions on Venezuelan exports. East Coast refineries have not imported Venezuelan crude since 2017, according the S&P report.
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Russian oil giant Rosneft has also marketed its ESPO grade more aggressively, signing new long term supply deals with state oil companies such as ChemChina and PetroChina.
During the week ending November 30, 2018, the United States exported more crude oil and petroleum products than it imported for the first time in weekly data going back to 1991. "If it happens, it would be an unambiguous headwind for refiners already struggling to find supplies", said Bob McNally, president of Rapidan Energy Group, an energy consultancy in Bethesda, Maryland.
The United States has overtaken Russian Federation and Saudi Arabia to become the world's biggest crude producer with production levels approaching 12 million barrels per day (bpd). A report from the American Petroleum Institute on Thursday said that the us has surplus gasoline stockpiles that "could approach burdensome levels" and force gas prices down further. But the rally has slowed on fears of weakening global growth, exacerbated by the U.S. OPEC's latest production cuts tightened the supply of heavy crude from Saudi Arabia. Venezuela also imports 150,000 b/d of petroleum product from the United States, including 75,000 barrels of diluent - a light hydrocarbon that is used to dilute bitumen so it can be transported in pipelines.
Other industries that rely heavily on oil may feel impacts.
"Most of the cash that the Venezuelan government gets comes from the US market, so that means they will have to figure out how to ask the Chinese to get some cash back, because otherwise they will be starved for cash", Monaldi said.