Iran and Venezuela could lose around 30 percent of their oil production next year due to sanctions re-imposed by the United States, according to the International Energy Agency (IEA).
In its first detailed forecast for 2019, the IEA said Venezuelan and Iranian oil production will fall by a combined 1.5 million barrels per day by the end of next year; however, extra oil output from OPEC and non-OPEC countries such as Saudi Arabia and Russia could compensate for the lost supply.
Iranian output could drop by about 900,000 barrels a day, or about 23 percent, and Venezuela could witness an output fall by 550,000 barrels a day, or 40 percent. Venezuelan production has already collapsed to the lowest in decades as the result of an economic crisis and its negative effect on oil infrastructure.
“No judgement was made as to which countries will cut back purchases,” the IEA said. Following the decision of U.S. President Donald Trump to leave the nuclear deal with Iran, many international companies, including European companies, have started to reduce purchases of Iranian oil and pull out from oil and gas projects in Iran.
The Organization of Petroleum Exporting Countries will meet next week and discuss whether to restore production it halted last year.
“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.”
Washington and Iran exchanged sharp words over oil prices on Wednesday, with Trump blaming OPEC for high oil prices and Tehran accusing him of stoking volatility after he withdrew last month from the nuclear deal.
Trump sparked the latest back-and-forth when he renewed his attack on OPEC in a tweet that said oil prices are too high and that the cartel was “at it again.”
Oil prices have risen around 60 percent over the past year after OPEC and some non-OPEC producers, including Russia, started reducing supplies in 2017. The cartel meets June 22-23 in Vienna, and producers are seen as likely to raise production, perhaps before the limits are due to sunset at year-end. Saudi Arabia says it is ready to temper prices by raising supply.
Iran’s OPEC governor, Hossein Kazempour Ardebili, fired back at Trump in a statement to Reuters. “You cannot place sanctions on two OPEC founder members and still blame OPEC for oil price volatility,” he said, referring to his country and Venezuela. “This is business, Mr. President -- we thought you knew it.”