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'Crucial period' for oil as Iran exports shrink: IEA

AFP  |  Paris 

Global output hit a record of 100 million barrels per day in August, but the market may tighten and prices rise as exports from and decline, said Thursday.

"We are entering a very crucial period for the market," the IEA said in its latest monthly report. "Things are tightening up." The global record came as output from the Organization of the Petroleum Exporting Countries rose to a nine-month high of over 32 million barrels per day (mb/d).

The cartel had agreed in in June to push up production in order to put a cap on soaring prices.

In recent months, prices have wavered comfortably between the $70 and $80 per barrel on the Brent crude futures contract.

According to the IEA, a rebound in Libyan production, near-record Iraqi output and higher supply from and OPEC kingpin have so far managed to offset the impact of shrinking production from crisis-hit and

But with the crisis in showing no sign of abating, and with new US sanctions on Iran's industry set to come into force on November 4, other producers may have to ramp up production even further if they want to limit the impact on the market.

"It remains to be seen if other producers decide to increase their production. The price range for Brent of $70-$80/bbl in place since April could be tested," the IEA said.

In May, US pulled the US out of the 2015 nuclear deal with and said other countries must stop buying oil from or face American sanctions.

And hundreds of thousands of Venezuelans have fled their country since the nation became engulfed in a political crisis that has sent the into free fall.

"The situation in Venezuela could deteriorate even faster, strife could return to and the 53 days to 4 November will reveal more decisions taken by countries and companies with respect to Iranian oil purchases," the IEA said.

Output from OPEC member Iran in August hit its lowest level since July 2016, the IEA said, "as more buyers distanced themselves from ahead of looming US sanctions", the report said.

Top buyers and have already cut back purchases from Tehran, and other countries are likely to do the same between now and November.

"While Iranian exports have fallen by nearly 500,000 barrels per day since May, shipments from and have risen by 200,000 barrels per day and 60,000 barrels per day respectively," the IEA added.

In Venezuela too, production dipped in August to 1.24 million barrels a day, and should it continue to decline, may hit 1 million barrels a day at the end of 2018.

OPEC, of which Venezuela is a member, had already warned that the country's output was at a three-decade low.

"If Venezuelan and Iranian exports do continue to fall, markets could tighten and could rise without offsetting production increases from elsewhere," the IEA warned.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, September 13 2018. 16:20 IST