Iran Venezuela looking at 30 percent cut in production in coming year

Bloomberg/Fuel Fix:

OPEC members Iran and Venezuela could lose almost 30 percent of their oil output next year due to U.S. sanctions and economic upheaval, requiring extra supplies from the group's 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 U.S. 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.

The Organization of Petroleum Exporting Countries 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 U.S. and Japan, made a prominent statement in its monthly report about its readiness 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."
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The Saudis and the Russians could easily replace the lost production from Iran and Venezuela and the growth in US production could also fill the void.  The US could also reduce imports if its refinery capacity was converted to handle the light crude being produced in teh shale wells.   It should also be noted that the price collapse of a few years ago happened when Iran was virtually shut out of the market because of sanctions.