In its Short-Term Energy Outlook, released yesterday, the US Energy Information Administration (EIA) increased its forecast for Brent and WTI crude oil prices.
It forecast Brent at an average $74.43 per barrel in 2018, $1.59 higher than its estimate last month, and WTI at $69.56 per barrel, a $2.53 increase from last month's forecast.
The organization also boosted its forecast for crude oil prices in 2019, estimating that Brent would average $75.06 per barrel ($1.38 higher than the last forecast) and WTI $69.56 per barrel (up $2.20 from last month's forecast).
The increase is attributed to "uncertainty about the amount that Iranian crude oil production could decline, and how much of the decline can be offset by other suppliers," EIA wrote in the report. In September, Iran averaged 3.4mn barrels per day, the country's lowest output since February 2016.
However, the report also noted that "in the third quarter of 2018, OPEC members (other than Iran and Venezuela) increased crude oil production by more than the amount that crude oil production in Iran and Venezuela declined."
KSA oil production averaged 10.52mn bpd in September, a 100,000 bpd increase from August and the nation's highest output level since November 2016.
But EIA says that the resolution of transportation constraints in the Permian region of the US, which will likely increase crude production, could keep prices "in the mid-$70 per barrel range."
Still, this depends on how drastic the reduction in Iranian oil production is; if it's larger than expected it could lead to higher prices.
EIA increased its forecast for US oil output, which it says will average 11.76mn bpd in 2019, 260,000 bpd higher that last month's forecast.
OPEC oil production is expected to average 32.46mn barrels per day in 2018, a 220,000 bpd decrease since 2017. It will fall to 32.14mn bpd in 2019, according to EIA.
Brent and WTI prices hit a four year high on October 3, trading at TK per barrel and Tk per barrel, respectively. Since then, prices have dropped to TK and TK, according to TK.