When sanctions were imposed, Iran’s exports fell by about 1.2 mb/d. Namely, EIA said:
It is too soon to say what will happen this time, but we should examine whether other producers could step in to ensure an orderly flow of oil to the market and offset a disruption to Iranian exports.
However, neither Venezuela nor Mexico can raise output in the short term, but some of the 1.5 mb/d that have been reduced by other producers under the Vienna Agreement might be available to keep markets well supplied.
In Venezuela, the decline of oil production is accelerating and by the end of this year output could have fallen by several hundred thousand barrels a day. The possible supply shortfall by Iran and Venezuela could cause a major challenge for producers to diverge from sharp price rises and fill the gap in terms of the number of barrels and in terms of oil quality.
The US has already affected oil prices. Even so, alongside steady demand growth, solid compliance with the Vienna Agreement, and new data showing a further fall in stocks, it contributed to Brent prices rising above $77/bbl.
As key players consider how to react to the new policy, the market balance continues to tighten, though by slightly less than seen last month. Because of rising prices, we lowered our estimate for 2018 global oil demand growth by 40 kb/d to 1.4 mb/d, and we increased our expectation for US oil production growth this year by 120 kb/d.
On the supply side, higher production from the US will contribute to counterbalance for lower volumes from elsewhere. For now, EIA's Oil Market Report says that there is a slight increase in EIA's estimation for US output growth in 2018. It also notes that several projects are in development to facilitate regional bottlenecks and to help rising US production reach markets.
New data show a further decrease in March of 27 mb to the lowest level in three years. Currently, the changing geopolitical landscape will shift the attention away from stocks as producers and consumers consider how to limit changes in the oil market.
See more information in the Oil Market Report