March 15 (UPI) -- OPEC has enough spare capacity to cover even a major loss of supply from Venezuela, where it is uncertain "if the fixes are durable" to overcome the latest electricity crisis, the IEA said.
"During the past week, industry operations were seriously disrupted and ongoing losses on a significant scale could present a challenge to the market," the International Energy Agency said in a report.
However, the International Energy Agency noted that the 1.2 million barrels of crude oil per day cut agreed to by OPEC and non-OPEC in December, and which started to be implemented in January, covers Venezuela's total production.
According to OPEC, Venezuela in February produced just over 1 million barrels per day, nearly nine percent less than in the previous month.
"Due to the cuts, OPEC members are sitting on about 2.8 million barrels per day of effective spare production capacity (Iran and Venezuela are excluded from the calculation), with Saudi Arabia holding two-thirds of it," the IEA said.
Venezuela is currently shipping about 400,000 barrels per day to China and India, the IEA said.
The country had been regularly selling a similar volume to the United States but U.S.-imposed sanctions in late January stopped those exports. Russia has been one of the countries taking advantage of increasing crude oil exports to the U.S. to around 150,000 barrels per day, the report said.
"Much of this spare capacity is composed of crude oil similar in quality to Venezuela's exports. Therefore, in the event of a major loss of supply from Venezuela, the potential means of avoiding serious disruption to the oil market is theoretically at hand," it added.
Russia has been much slower than Saudi Arabia to reduce crude production under the deal, which was reach in December when OPEC and non-OPEC participants agreed on a combined 1.2 million barrels per day reduction to help support crude oil prices -- of which OPEC accounted for 800,000 barrels of the cut.
"The cuts were implemented in January and compliance by OPEC reached 94 percent in February, with Saudi Arabia cutting back by about 170,000 barrels per day more than required," the IEA said.
"The non-OPEC countries are complying more slowly at a rate of 51 percent, with Russia reducing its output very gradually," he added.
The IEA said that the oil market is tightening.
"The market could show a modest surplus in 1Q19, before flipping into deficit in 2Q19 by about 0.5 million barrels per day. This does not take into account Saudi Arabia's announced plans to reduce its exports further in April," it said.
The Paris-based agency, which was set up to act as a counterbalance to OPEC and gather energy intelligence to serve its members which include Western nations that import crude oil, said OPEC is complying faster than Russia with the agreed-to cuts.
Rising production there is not a new story; what is game changing is that the U.S. in 2021 will become a net oil exporter on an annual average basis.
"This year U.S. seaborne oil trade will move into surplus with net exports rising to nearly 4 million barrels per day by 2024," IEA said.