American supply growth this year will exceed Venezuela's total output, the IEA said, another signal that OPEC's efforts to buoy prices may ultimately prove self-defeating.
If refiners are unable to source enough heavy and extra heavy crude, they will buy the next best alternative, in this case medium density crudes, so the impact of sanctions is rippling through the entire oil market.
At 07:56 GMT, April WTI crude oil is trading $53.82, up $0.35 or +0.65% and April Brent crude oil is at $62.94, up $0.52 or +0.83%.
While remaining volatile, oil prices have rallied to just above $60 a barrel and jumped more than a dollar after the Opec production update.
However, analysts are warning that record U.S. supply and anticipated economic slowdown later this year might start capping the world's oil markets.
Asia imported about 669,000 barrels per day (bpd) of Venezuelan crude in January, according to vessel-tracking and port data compiled by Refinitiv, with eight of the 13 cargoes going to China, four to India and one to Malaysia.
"Oil prices have not increased alarmingly because the market is still working off the surpluses built up in the second half of 2018", the IEA said.
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"This report is bearish", said Phil Flynn an oil analyst at Price Futures Group in Chicago.
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. Venezuela's output is already at the lowest in decades as a spiraling economic crisis takes its toll on oil infrastructure.
Saudi Arabia plans to reduce its oil exports to 6.9 million barrels per day (bpd) in March, down from 8.2 million bpd a year ago, the country's energy minister, Khalid Al-Falih, announced yesterday.
According to the decision the OPEC+ countries adopted at the meeting on December 7, 2018, the alliance will reduce production in the first half of 2019 by 1.2 mln barrels. In quality terms, it is more complicated.
OPEC is partnering with 10 non-member nations, including Russian Federation, to keep 1.2 million bpd off the market. It has been extended several times and, under the latest deal, participants are cutting output by 1.2 million bpd until the end of June.
The recent developments in the crude oil market have all but eliminated the discount enjoyed by heavy crudes, and in some cases, physical cargoes of some heavy grades have traded at premiums to light crudes.
