By Shariq Khan
NEW YORK (Reuters) – The U.S. plans to expand licenses for deals related to Venezuela, which could help the country return to its pre-blockade oil production levels by mid-2026. This information was shared by the U.S. Energy Information Administration (EIA) on Tuesday.
Venezuela's state oil company, PDVSA, had to drastically cut its production due to a strict naval blockade imposed by Washington, aimed at pressuring President Nicolas Maduro, who was captured by U.S. forces in January.
This blockade severely limited Venezuela's oil exports, resulting in millions of barrels of crude accumulating in storage tanks and vessels. Prior to the blockade, Venezuela was producing about 1.1 to 1.2 million barrels of oil daily.
Since then, PDVSA has managed to restore most of its production, now nearing 1 million barrels per day. This recovery followed the U.S. authorization for commodities traders Vitol and Trafigura, alongside oil giant Chevron, to export Venezuelan oil and help manage the surplus.
The oil has largely been stored in Caribbean terminals, where it is expected to be shipped to refineries on the U.S. Gulf Coast, according to the EIA.
Additionally, the U.S. issued a broader general license late last month, which allows more companies to transport and sell Venezuelan oil. This step is anticipated to help ease production restrictions and bring output back to pre-blockade levels by the end of the second quarter of this year, according to the EIA.
Meanwhile, global oil production is expected to grow faster than demand until the end of 2027, leading to an increase in inventories and potential pressure on prices, as indicated by the agency.
The EIA predicts that Brent crude will average $57.69 per barrel this year, a 3% increase from its previous estimate of $55.87, although it remains significantly lower than last year's average of about $69. It is also expected to drop further to around $53 per barrel next year.
The projected U.S. oil output for this year is set to reach a record 13.60 million barrels per day, which is about 10,000 barrels higher than earlier forecasts. However, this figure is expected to decrease to about 13.32 million barrels per day by 2027.
Globally, the total daily production of crude and liquid fuels is forecast to average 107.8 million barrels, which is up about 100,000 barrels from prior estimates, according to the EIA.