Looming Venezuelan sanctions give a bump to Colombian oil prices

The potential resumption of US sanctions against Venezuela is giving a boost to Colombian oil of the same quality. 

Heavy sour Castilla crude oil for delivery in April is being offered at a discount of around $9 per barrel to benchmark ICE Brent prices, stronger levels compared with the previous month, according to people with knowledge of the situation who asked not to be named while discussing non-public information. 

The US has threated to reimpose oil sanctions in April if the Venezuelan government upholds a ban on opposition front-runner Maria Corina Machado’s run for president. The six-month sanctions relief issued in October has been key to Venezuela’s increase in oil output that is the top revenue generator for Nicolas Maduro regime. In January, production soared to 796,000 barrels a day, the highest in four years. 

The commissioning of the Dos Bocas refinery in Mexico and civil unrest in Colombia are also helping to support prices, the people said. The new refinery operated by Petroleos Mexicanos is expected to start producing fuels this week and will reach full tilt by the end of March, tightening supplies of heavy sour oil like the one Colombia exports.