* US executive order restricts Venezuela’s ability to sell
assets

* U.S. and China drop tariff threats

* Oil markets tight on OPEC cuts, looming U.S. sanctions vs
Iran
(Adds post-settlement trade)

By Jessica Resnick-Ault

NEW YORK, May 21 (Reuters) – U.S. crude hit its highest
level since 2014 on Monday amid rising concerns that Venezuela’s
oil output could fall further following the country’s
presidential election and potential sanctions on the OPEC-member
nation.

Prices firmed further as U.S. President Donald Trump had
discussions with Russia and China about issuing new debt to
Venezuela. Trump signed an executive order on Monday restricting
Venezuela’s ability to liquidate state assets, a senior
administration official told reporters.

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

“It’s been going down for a bit, but there is an expectation
that the decline will accelerate,” said Jamie Webster, senior
director of the Center for Energy Impact at the Boston
Consulting Group. “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.”

U.S. crude futures settled 96 cents, or 1.4 percent,
firmer at $72.24 a barrel, after touching $72.33, the highest
since November 2014. In post-settlement trade, the benchmark hit
a fresh 3-1/2 year high at 72.59.

Brent crude futures gained 71 cents, or 0.9 percent,
to settle at $79.22 a barrel. In post-settlement trade, the
global benchmark rallied to $79.59, up more than a dollar from
the previous close.

Venezuela’s socialist President Nicolas Maduro faced
widespread international condemnation on Monday after his
re-election in a weekend vote his critics denounced as a farce
cementing autocracy in the crisis-stricken oil producer.

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. <PRODN-VE>

“The spectre of U.S. 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 $80 a barrel last week for the first time
since 2014, and the market may again try to clear that hurdle,
said Gene McGillian, vice president of research at Tradition
Energy in Stamford, Connecticut.

“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 U.S. sanctions on Iran could curb the country’s crude
exports have led prices to trade higher in recent weeks.

Additionally, a possible U.S. 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,
U.S. Treasury Secretary Steven Mnuchin said on Sunday, giving
global markets a lift in early Monday trade.

Stabilizing trade relations between the countries could
boost oil demand, Tradition’s McGillian said.

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

Dudley said he saw oil prices falling to between $50 and $65
because of surging shale output and OPEC’s capacity to boost
production to cover a potential shortfall in Iranian supplies
owing to U.S. sanctions.
(Additional reporting by Amanda Cooper in London and Henning
Gloystein in Singapore; Editing by Marguerita Choy and Diane
Craft)