Lower oil prices are expected to cut U.S. drilling activity and reduce output 1% this year from the top producing country, while potentially higher output from Venezuela could add pressure, the Energy Information Administration said on Tuesday. The comments from the Department of Energy’s statistical arm add to worries expressed by some U.S. oil producers about U.S. President Donald Trump’s request for domestic oil companies to enter Venezuela and help raise its output after the capture of President Nicolas Maduro. Already reeling from low oil prices, U.S. shale producers have said the push for more Venezuelan oil to hit the markets will hurt them even more.
Brent crude oil prices are likely to average $58 a barrel this year, compared to $69 a barrel last year, as global production of liquid fuels outpaces demand and causes a buildup of inventories, the EIA said in its monthly Short Term Energy Outlook report.
The EIA’s latest outlook was finalized under the assumption that sanctions against Venezuela will stay in place through 2027, the agency said. If those sanctions ease, oil prices could fall more steeply than its current expectation, the EIA said.
“Any change in sanctions or other U.S. government policy related to Venezuela that could result in more oil production than we assumed in this forecast would put additional downward pressure on oil prices,” the EIA said. U.S. Treasury Secretary Scott Bessent told Reuters on Saturday that more U.S. sanctions on Venezuela could be lifted as soon as this week to facilitate oil sales.
(Reporting by Shariq Khan and Scott DiSavino in New York Editing by Rod Nickel)