Iranian oil industry has been under pressure from the US efforts to isolate the country by reimposing sanctions.
"In terms of crude oil quantity, markets may be able to adjust after initial logistical dislocations (from Venezuela sanctions)", the Paris-based IEA said. WTI Crude, according to Goldman Sachs, will average US$55.50 a barrel, compared with an earlier estimate of US$64.50 a barrel.
Most analysts expect that the OPEC+ supply curtailment deal will ultimately rebalance supply and demand and provide support for higher oil prices.
Brent crude futures were up $0.77 at $63.19 a barrel by 1225 GMT while USA crude oil futures rose $0.53 to $53.63 a barrel.
But the country's oil industry has been in relative and absolute decline for the last 50 years as problems of producing and marketing its heavy crudes have been compounded by an unattractive investment regime and mismanagement.
USA crude oil inventories rose last week to the highest since November 2017 as refiners cut runs to the lowest since October 2017, the Energy Information Administration said.
Oil prices rallied yesterday amid signs that the Organisation of Petroleum Exporting Countries (OPEC's) production cuts are taking hold. The dense crudes are much more hard to refine and tend to contain significant quantities of sulfur and other impurities that are costly to remove.
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.
With the actual loss of Venezuelan and some Middle Eastern crude, and the potential loss of Iranian barrels, the dilemma for Asian refiners becomes more acute.
Opec members vowed to cut 800,000 barrels a day of that amount, so January's figures fell just 3,000 barrels short of that commitment.
The increase came despite falling net imports, which dropped to the lowest on record, as domestic crude production remained at peak levels for the fifth straight week. Back in December, OPEC and 10 other producers let by Russian Federation agreed to restrict oil production collectively by 1.2 million barrels a day for the first half of 2019. The group made a strong start to the strategy, slashing output by 930,000 bopd to the lowest in nearly four years, the IEA said. The so-called OPEC+ alliance aims to prevent another price-crushing oil glut like the one that gripped the market between 2014 and 2016.