S & P Global Platts - Crude oil production capacity in Iran and Venezuela will fall by a combined 1.76 million b/d if US sanctions on these countries remain in place, the International Energy Agency said in a report Monday.

IEA forecasts Venezuelan crude production capacity to fall from 1.31 million b/d in 2018 to 750,000 b/d in 2019, a loss of 560,000 b/d in a year. Iranian crude production capacity will fall from 3.85 million b/d in 2018 to 2.65 million b/d this year, a loss of 1.2 million b/d if US sanctions remain in place, IEA said.

"OPEC's effective capacity this year could plunge by more than 1.5 million b/d as the US embargo hits Iran hard and Venezuela, in the midst of a political crisis, sees production decline further," IEA said in the report released at the start of the CERAWeek by IHS Markit conference in Houston.

"The continuation of sanctions on Iran and further losses in Venezuela would offset capacity increases from elsewhere and cut OPEC's effective capacity by 380,000 b/d by 2024."

On Venezuela, IEA said the political situation is "changing and forecasting output is more difficult than usual." The agency said production declines in Venezuela in 2019 could be "as aggressive" as the 570,000 b/d decline in 2018.

"Clearly the reality could be very different," the IEA said. "An improvement in the political climate would give PDVSA the chance to repair the industry. If the situation worsens, the sector could collapse for an unknown period of time."

On January 28, the US unveiled sweeping sanctions on PDVSA, Venezuela's state-owned oil company, setting an immediate ban on US exports of diluent to Venezuela and requiring payments made to PDVSA to be through blocked accounts, setting up a de facto ban on US imports of Venezuela crude. The US, and dozens of other nations, recognize opposition leader Juan Guaido as Venezuela's legitimate president.

S&P Global Platts Analytics forecasts that US sanctions will cause Venezuelan crude output, which averaged about 1.2 million b/d in January, to fall to 825,000 b/d in the fourth quarter of this year and then to fall to an average of 750,000 b/d in 2020.

Venezuela produced 1.10 million b/d of crude in February, down 60,000 b/d month on month, according to an S&P Global Platts survey released Thursday.

Venezuela's oil production has fallen 910,000 b/d in two years and is at its lowest point since a strike in late-2002 and early-2003, according to Platts data.

Iran maintained output at 2.72 million b/d in February, the same as January, according to the latest Platts survey.

In November, the US re-imposed Iranian crude oil sanctions, but granted Iran's top oil buyers, including China, India, Japan, South Korea and Turkey, six months of "significant reduction exemptions", allowing them to continue to import Iranian crude with a pledge to reduce future purchases.

"As output sinks further, Iran is likely to shut in more and more wells and carry out maintenance at its ageing oil fields," IEA said in its report.