UPDATE 10-Oil prices up 2 pct following U.S. sanctions on Venezuela

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* U.S. sanctions on Venezuelan oil reverberate globally

* Libya's Sharara field to remain shut until occupiers leave-NOC (Updates with API crude inventory data)

By Laila Kearney

NEW YORK, Jan 29 (Reuters) - Oil prices gained more than 2percent on Tuesday after the United States imposed sanctions onstate-owned Venezuelan oil company PDVSA, a move likely toreduce the OPEC member's crude exports and relieve some globaloversupply worries.

International Brent crude oil futures LCOc1 were up $1.39to settle at $61.32 a barrel, a 2.32 percent rise, while U.S.West Texas Intermediate (WTI) crude futures CLc1 increased$1.32, or 2.54 percent, to settle at $53.31 a barrel.

Venezuela is among the world's largest heavy crude oilproducers, and the United States has been its biggest client,taking about half the country's export volumes. urn:newsml:reuters.com:*:nL1N1Z415R.

The Trump administration's restrictions on Venezuelan crude,aimed at driving President Nicolas Maduro from power, stop shortof banning U.S. companies from buying oil from the LatinAmerican country. However, proceeds from such sales will be putin a "blocked account" that should deter PDVSA from shippingcrude to the United States.

"Today's price advance looked like a delayed reaction toyesterday's Venezuelan headlines as traders may have had secondthoughts about the impact on domestic oil supplies," JimRitterbusch, president of Ritterbusch and Associates, said in anote.

Additionally, "possibilities that some Gulf Coast refinersmay need to pay up for alternative stocks from such places suchas Saudi Arabia that has already suggested that they will besteering cargoes away from the U.S.," he wrote.

Venezuela's exports fell to little more than 1 millionbarrels per day (bpd) in 2018 from 1.6 million bpd in 2017,according to Refinitiv ship-tracking data and trade sources. urn:newsml:reuters.com:*:nL1N1Z415R

Petromatrix estimated that Venezuelan exports will drop byabout 500,000 barrels per day under current conditions.

Venezuela is a member of the Organization of the PetroleumExporting Countries, which is implementing a supply cut deal tosupport prices. urn:newsml:reuters.com:*:nL8N1ZO4DP

Russia, OPEC's biggest non-member ally, and China have bothpublicly denounced the U.S. sanctions. urn:newsml:reuters.com:*:nL5N1ZT2KYurn:newsml:reuters.com:*:nL3N1ZT3KW

Meanwhile, Libya's biggest oilfield, El Sharara, will remainshut until departure of an armed group occupying the site, thehead of National Oil Corp said. urn:newsml:reuters.com:*:nL5N1ZT3MQ

Despite some tightening, global oil supply remains high,largely because of a more than 2 million bpd increase in U.S.crude oil production C-OUT-T-EIA last year to a record 11.9million bpd.

U.S. crude stockpiles rose by 1.1 million barrels last weekcompared with analysts' expectations for an increase of 3.2million barrels, industry group the American Petroleum Institutesaid on Tuesday after prices settled. urn:newsml:reuters.com:*:nZXN04HZ00

The U.S. Energy Information Administration's crude andgasoline inventory data will be released on Wednesday.

Some in the oil industry also worry that crude demand couldstutter if the trade war between Washington and Beijing slowsglobal economic growth. urn:newsml:reuters.com:*:nL8N1ZP5U0urn:newsml:reuters.com:*:nL8N1ZM05E

In China, a top oil importer, signs of a slowdown haveemerged. Activity in its vast manufacturing sector is expectedto shrink for the second straight month in January, a Reuterspoll showed. urn:newsml:reuters.com:*:nL3N1ZO2VIurn:newsml:reuters.com:*:nL3N1ZS1V4urn:newsml:reuters.com:*:nL3N1ZS4NN

GRAPHIC-Venezuela crude oil exports   https://tmsnrt.rs/2Sfgis6
(Reporting by Laila Kearney; Additional reporting by ShadiaNasralla in London, Henning Gloystein in Singapore and ColinPackham in SydneyEditing by David Gregorio, Alistair Belland Leslie Adler) ((Laila.kearney@thomsonreuters.com; (917) 809-0054;))

This article appears in: Stocks , World Markets , Oil , Commodities

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