Shanghai International Shipping Institute

US crude hit its highest level since 2014 on May 21 on the back of mounting fears that Venezuela's oil output could drop further following the country's presidential election and potential sanctions on the OPEC-member nation.

Prices firmed further as US President Donald Trump had discussions with Russia and China about issuing new debt to Venezuela. Mr Trump has signed an executive order restricting Venezuela's ability to liquidate state assets, a senior administration official told Reuters.

Any restriction on Venezuela's financing, logistics or power supply could further depress the country's crude output.

The United States is actively considering oil sanctions on Venezuela, where output has dropped by a third in two years to its lowest in decades.

"The spectre of US oil sanctions on the embattled Latin American producer now looms large as Washington strives to tighten the financial noose," PVM Oil Associates strategist Stephen Brennock said in a note.

Brent pushed past US$80 a barrel last week and the market may again try to clear that hurdle, said Tradition Energy vice president Gene McGillian.

It seems as if the pull backs are just short-term profit taking and we will see whether people are going to be willing to drive the market through $80 again," he said.

Beyond Venezuela's production woes, geopolitical concerns that US sanctions on Iran could curb the country's crude exports have led prices to trade higher in recent weeks.

Additionally, a possible US trade war with China is "on hold" after the world's two largest economies agreed to drop their tariff threats while they work on a wider trade agreement. Stabilising trade relations between the countries could boost oil demand.

Rising output from US shale and key OPEC producers could end the rally, BP chief executive Bob Dudley told Reuters. Mr Dudley said he expected a flood of US shale and a possible reopening of OPEC taps to cool oil markets after crude rose above $80 a barrel last week.