Low production of Iran and Venezuela is forcing OPEC to take action

Low production of Iran and Venezuela is forcing OPEC to take action



Twilight News

16 minutes ago

The International Energy Agency (IEA) said a drop in oil production in Iran and Venezuela could force the Organization of Petroleum Exporting Countries (OPEC) and Russia to decide later this month to increase production.

Even with the production gap blocked by the United States' re-imposition of sanctions on Iran and Venezuela's political crisis, the oil market is likely to remain vulnerable to volatility next year, the agency said.

Oil ministers from the Organization of the Petroleum Exporting Countries meet on June 22 in Vienna.

OPEC and Russia decided in 2016 to cut production in an effort to raise prices after a sharp drop in oil prices due to a global production gap.

But the Paris-based International Energy Agency (IEA) has indicated a possible change in the deal, based on data from oil-exporting countries and analysts' comments in recent weeks.

"We reviewed a scenario rather than expectations, indicating that the production of these two countries (Venezuela and Iran) could be less by 1.5 million barrels per day than their current production," it said in a report.

"To compensate for these losses, we estimate that the OPEC countries in the Middle East may increase their production in the short term slightly by about 1.1 million barrels per day and there may be more production than Russia at the top of the increase in the list of non-OPEC producers in 2019."

The agency warned that whatever the outcome of the OPEC meeting, the market will be slightly balanced next year, and weak in front of higher prices in the event of a further decline.

"We support all efforts to reduce the supply disruptions that, as history shows, do not serve the interests of producers or consumers."

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