Global oil markets are tightening quickly on falling supply from Venezuela, which posted 2017’s biggest unplanned output fall and could see a further decline in 2018, the International Energy Agency (IEA) said on Friday. Debt and infrastructure problems cut Venezuela’s December output to 1.61 million barrels per day (bpd), somewhere near a 30-year low. That helped oil prices top $70 per barrel in early January, their highest level in three years.
“The general perception that the market has been tightening is clearly the overriding factor and, within this overall picture, there is mounting concern about Venezuela’s production,” the IEA, which coordinates energy policy in industrialised nations, said in its monthly report.
“Given Venezuela’s astonishing debt and deteriorating oil network, it is possible that declines this year will be even steeper… U.S. financial sanctions are also making it tougher for Venezuela’s oil sector to operate,” the IEA said, according to Reuters.
As a result of lower Venezuelan production, the IEA said OPEC’s crude output in December fell to 32.23 million bpd, boosting the group’s compliance with a deal to curb output.
December also saw production problems in the North Sea, which helped cut global December oil supply to 97.7 million bpd, down 405,000 bpd from November.
OPEC agreed to lower production in 2017 and has agreed to maintain output cuts for the whole of 2018 to help bring oil stocks in OECD industrialised countries down to their 5-year average.
The IEA said that if OPEC and its non-OPEC allies maintained good compliance with the output deal, oil markets would balance in 2018.
