Disruptions to hit Iran and Venezuela oil output hard
Opec members Iran and Venezuela could lose almost 30 per cent of their oil output next year due to US sanctions and economic upheaval, requiring extra supplies from the group’s Arabian Gulf members, the International Energy Agency said.
In its first detailed forecast for 2019, the IEA said new oil output from outside Opec – in particular US shale – should be enough to cover growth in demand, but nations such as Saudi Arabia may still need to boost output to compensate for lost supply from other members.
Opec will meet next week and debate whether to restore production it halted last year. The IEA, which oversees the use of emergency oil stockpiles in major economies such as the US and Japan, made a prominent statement in its monthly report about its readiness to avert supply disruptions.
“Even if the Iran-Venezuela supply gap is plugged, the market will be finely balanced next year, and vulnerable to prices rising higher in the event of further disruption,” the Paris-based agency said. “It is possible that the very small number of countries with spare capacity beyond what can be activated quickly will have to go the extra mile.”
Opec faces intense political pressure as oil’s rally to a threeyear high above $80 a barrel has spurred warnings about the threat to the global economy, and drawn fire from US President Donald Trump.
Saudi Arabia says it’s ready to temper prices by raising supply, setting the stage for a clash with fellow Opec members when they gather in Vienna on June 22.
American foreign policy is upping the ante for the kingdom, as Mr Trump re-imposes sanctions on Iran that will almost certainly strain global oil supplies.
Iranian output could be curbed next year by about 900,000 barrels per day, or about 23 per cent, the IEA said. The agency stressed the estimate is a “scenario” rather than a forecast, based on the impact of previous sanctions.
Venezuela, where production has already collapsed to the lowest in decades as an economic crisis batters oil infrastructure, could see its output fall by a further 550,000 bpd, or 40 per cent.