A hefty rise in US oil inventories triggered a market sell-off in midweek despite a deepening political crisis in Venezuela and tightening sanctions on Iran.

Underlying market sentiment, however, remained strong as Saudi Arabia made it clear the kingdom is in no rush to step in to make up for lost Iranian barrels after the Trump administration ended waivers for Iran’s major customers from 1 May.

Prices had drawn support earlier in the week after Venezuelan opposition leader Juan Guaido stepped up his campaign to unseat President Nicolas Maduro.

US-backed Guaido’s call for an uprising increased fears that the escalating violence could wreak further havoc on Venezuela’s crippled oil industry. A civil war in Libya also compounded worries.

Oil markets have tightened this year due to Opec-led supply curbs which have added to the impact of US sanctions on both Iran and Venezuela.

The Energy Information Administration (EIA) said US crude stockpiles, including Gulf Coast inventories, rose to their highest since September 2017 last week amid record production and rising imports.

Gasoline stockpiles also increased unexpectedly while distillates fell. Crude inventories rose by 9.9 million barrels in the week compared with analysts' expectations of a rise of of 1.5 million barrels.

Distillate stockpiles, which include diesel and heating oil, fell by 1.3 million barrels, the EIA data showed.

Brent was trading at about $71.60 per barrel in late London business on Wednesday compared with $74.40 per barrel at the same time the previous week.

US West Texas Intermediate crude was fetching about $63.10 per barrel in early New York trading, down around 1.5% from $65.80 per barrel at the same time the previous week.

Oil hit a six-month high last week as the White House announced it would tighten sanctions on crude shipments from Iran, ending the waivers that allowed several countries to keep buying Iranian oil.

Washington’s goal is to drive Iran’s crude exports as close to zero as it can, though it remains unclear whether Iran’s top oil customers including China and Turkey will comply.

Opec, meanwhile, is scheduled to meet in June to discuss its production policy.

While Washington has demanded the group ease restrictions to make up for the shortfall from Iran, Opec’s de facto leader Saudi Arabia said on Tuesday that it will not rush to boost oil supply to make up for a loss of Iranian crude.

Saudi Minister Khalid al-Falih said Opec and allies led by Russia will stick to a global deal on oil production, which could be extended to the end of 2019. His comments came after President Donald Trump urged Opec last week to lower oil prices.

Oil prices have surged by almost 40% since January, lifted by the Opec-led supply cuts.

Zanganeh said US sanctions threatened Opec’s existence.

“Those who use oil as a weapon against two founding members of Opec are disturbing the unity of Opec and creating the death and collapse of Opec and the responsibility for that is with them,” he claimed.

Zanganeh reiterated that Washington will fail to bring Iran’s oil exports to zero.

Despite this week’s price weakness, geopolitical tensions, sanctions and the deepening political crisis in Venezuela are seen as likely to sustain the general strength of oil markets.

Weekly

Prices dip as US inventories rise