EIA: US oil drilling will slow down as prices fall, Venezuela's growth could increase pressure

Energy Information Administration reported on Tuesday that lower oil prices will reduce U.S. drilling activity and reduce production by 1% in the United States this year, while a possible increase in Venezuelan output could add to the pressure. The Department of Energy's statistics arm's comments add to the concerns expressed by some U.S. producers regarding President Donald Trump's call for domestic oil companies to enter Venezuela to help increase its production after President Nicolas Maduro was captured. U.S. oil producers are already struggling with low oil prices. They say that the demand for more Venezuelan crude oil will only make them worse.

Brent crude oil is expected to 'average $58 a bar this year, compared to $69 a bar last year. This is because global production of liquids fuels has outpaced demand, causing a build-up of stocks, according to the EIA in its Short Term Energy Outlook monthly report.

EIA said that its latest outlook was based on the assumption that sanctions against Venezuela would remain in place until 2027. The EIA said that if sanctions against Venezuela were to ease, oil prices could drop more than expected.

The EIA stated that "any change in sanctions or any other U.S. Government policy related to Venezuela which could result in more oil production than assumed in this forecast would add additional downward pressure to oil prices." U.S. Treasury secretary?Scott Bessent said on Saturday that additional U.S. sanctions against Venezuela could be lifted this week in order to facilitate oil sales.

(source: Reuters)