With the prospect of an ever-increasingly energy independent USA coming closer to fruition, current energy products will have to cut output in order to keep prices at a suitably high level.
"Disruptions have increased with risks that Venezuela's production decline accelerates following the introduction of additional US sanctions related to the Venezuelan oil industry", Reuters quoted the investment bank as saying. WTI Crude, according to Goldman Sachs, will average US$55.50 a barrel, compared with an earlier estimate of US$64.50 a barrel.
Falih pointed out that the state-owned oil company "Saudi Aramco" was planning to develop an worldwide energy exploration and production business, stressing that the overseas expansion would be the company future's "core pillar".
Global benchmark Brent crude traded at around $62.90 Tuesday morning, up 0.8 percent, while U.S. West Texas Intermediate (WTI) stood at $53.46, more than 0.6 percent higher.
The cartel made the pledge a year ago alongside major oil producing countries outside the cartel, including Russian Federation, to safeguard oil prices against a global economic slowdown.
Since January 1, an OPEC-led group has been cutting at least 1.2 million barrels per day from production in an effort to trim the global supply and stabilize prices.
Soaring output is putting the USA on course to become a net exporter of crude oil and petroleum products next year. OPEC members (excluding Iran, Venezuela and Libya) are responsible for two thirds of production cut.More news: El Chapo cries after he arrives in NY
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While global markets remain comfortably supplied, disruption in Venezuela poses a threat because production of the heavier, higher-sulfur crude it pumps is being reduced elsewhere, the IEA said in a monthly report.
The U.S. administration likely calculated any fallout from sanctions on oil prices would be small given the limited volumes of crude involved and the expectation that the standoff would be resolved quickly.
Heavy crudes are much harder to refine and tend to contain significant quantities of sulfur and other impurities that are costly to remove, which is why they sell at a hefty discount to medium and light oils.
Furthermore, the report affirmed that in 2019, demand for OPEC crude is forecast at 30.6 mb/d, around 1.0 mb/d lower than the 2018 level. In quality terms, it is more complicated.
Oil prices gained almost two percent on Tuesday, supported by OPEC-led production cuts which Saudi Arabia said it would surpass by over half a million barrels per day (bpd) and by US sanctions against Iran and Venezuela.
OPEC members along with allies including Russian Federation agreed in early December to trim production by 1.2 mbd from January 1, in a bid to eliminate a production glut and shore up prices. The group made a strong start to the strategy, slashing output by 930,000 bopd to the lowest in nearly four years, the IEA said.
Any economic slowdown could cap oil markets.