The IEA has called the conditions for the growth of oil prices

© AP Photo / Hasan JamaliНефтяной the machine-rocking. Archival photoThe IEA has called the conditions for the growth of oil prices© AP Photo / Hasan Jamali

The international energy Agency (IEA) allows the growth of oil prices above current levels in case the oil exports of Venezuela and Iran will continue to decline, and the market will not be able to compensate for this increased production in other countries, according to a September report by the IEA.

The price of Brent crude oil decreased in August to the level of 70 dollars per barrel and are now growing to $ 80 per barrel. «Two reasons for this hesitation lies in the fact that the decrease in oil production in Venezuela and is coming on 4 November, when US sanctions against Iran will enter into force,» the report said.

Oil production in Iran in August fell by 150 thousand barrels per day compared with July to 3.78 million barrels a day. Oil exports decreased by 280 thousand barrels per day compared with July, to 1.9 million barrels per day, including China and India have reduced purchases of Iranian oil by 200 thousand barrels per day and 380 thousand barrels per day. Oil production in Venezuela declined by 20 thousand barrels per day to 1.24 million barrels per day, the report said.

According to IEA estimates, as of August, OPEC has spare capacity for oil production is 2.7 million barrels per day, 60% of this is accounted for by Saudi Arabia. «But it is unclear how much capacity, in addition, which say that they can be easily put into operation, will be available at a further reduction of oil exports of Venezuela and the imposition of sanctions against Iran. It is not only a question of volumes: oil refineries, which use oil of Venezuela and Iran, will compete for oil of similar quality to maintain production at a certain level», the experts of the IEA.

An additional source of oil on the market may be the growth of production in Brazil and USA, as well as production in Libya. At the same time, oil producers, comparable in quality to Iran, Iraq, Saudi Arabia and Russia increased oil production in August in accordance with the mitigation agreement to reduce oil production. «One of the regular customers of the national oil company of Iran, NIOC in Europe had replaced Iranian oil Saudi varieties. According to reports, in Asia, some refineries have requested a greater volume of oil from Saudi Arabia on Oct. While the exports of Iran decreased by about 500 thousand barrels per day in may, the supply of oil from Iraq and Saudi Arabia increased by 200 thousand barrels per day and 60 thousand barrels per day respectively,» States the report.

«We are entering a difficult period in the oil market. The situation in Venezuela could deteriorate faster, conflicts can re-start in Libya and during the 53 days until November 4 (the date of the imposition of U.S. sanctions against Iran — ed.) countries and companies will take more decisions on purchases of Iranian oil. To find out, decide whether to other oil-producing countries to increase production. The range of prices on Brent oil at $ 70-80 per barrel can be tested,» notes the IEA.

The IEA has called the conditions for the growth of oil prices© Infographicsrussia forces in the world oil market