Gasoline prices are shown in Carlsbad, California, U.S., May 21, 2018. USA gasoline prices have climbed to $2.92 a gallon on average, and are already more than $3 in several states. By Monday, U.S. President Donald Trump said the Chinese economy has agreed to take on "massive" amounts for farm and agricultural products, offering a life line to his base of supporters in U.S. farm states.
Any restriction on Venezuela's financing, logistics or power supply could further depress the country's crude output. "There's increasingly a view that this could be as bad as Libya was in its worst days - that production could fall to a very small percent of what it is capable of doing". It earlier touched $72.83 a barrel, highest since November 2014.
The dollar traded mixed on Tuesday, hovering near five-month highs hit on Monday. The global benchmark crude traded at a US$7.63 premium to WTI for the same month.
The Venezuelan Socialist President Nicholas Maduro faces a massive worldwide conviction on Monday after his re-election for a new term.
OPEC may decide to raise oil output as soon as June due to worries over Iranian and Venezuelan supply and after Washington raised concerns the oil rally was going too far, OPEC and oil industry sources familiar with the discussions told Reuters.
"That could mitigate any impacts on Iranian exports", said Andy Lipow, president of Lipow Oil Associates. Iranian officials vowed over the weekend to uphold the pact curbing its nuclear activities if the European Union could offset renewed USA sanctions.
Venezuela, which is a member of the Organisation of the Petroleum Exporting Countries (Opec), has suffered a severe decline in oil production recently due to lack of investment in the industry and now production is expected to be weakened even more when United States sanctions are imposed.
Steven Mnuchin, treasury secretary for the US, said over the weekend that the world's largest economies have agreed to suspend their tariff threats and work on a wider trade agreement - thus averting, at least for the time being, a full out trade war dealing a significant blow to global growth.
Stabilizing trade relations between the countries could boost oil demand, Tradition's McGillian said.
Rising output from us shale and key OPEC producers could end the rally, BP CEO Bob Dudley told Reuters. "Combined with expectations for falling Iranian production as the USA pressures allies to reduce their imports this will push crude oil prices up to $80 a barrel and we think it can go higher".
In addition, continuing production cut by Opec and Russian Federation, the forthcoming public offer proposed by the world's largest oil producer Saudi Aramco and US's decision to withdraw from Iran nuclear deal and reimpose sanctions on the oil rich country, would also keep the oil prices boiling.