U.S. crude production is slated to drop by 100,000 barrels per day this year, according to the U.S. Energy Information Administration.
In its latest short term energy outlook, the Energy Information Administration (EIA) said total U.S. crude oil production fell by 100,000 barrels per day in July compared with June.
The EIA expects U.S. crude production to average 9.4 million bpd in 2015, 0.1 million bpd less than the agency’s July forecast.
Crude production is forecast to dip down to 9.0 million bpd in 2016, or about 0.4 million bpd lower than previously expected.
The EIA said that production is expected to continue falling through mid-2016 before growth resumes in late 2016.
U.S. oil demand growth remained at 400,00 bpd, unchanged from the agency’s last forecast.
The EIA also boosted its 2016 demand growth forecast to 190,000 bpd, up from its previous forecast of 130,000 bpd, Reuters noted.
Brent prices are projected to average $54 per barrel in 2015 and $59 per barrel in 2016, $6 per barrel and $8 per barrel lower than last month’s short term outlook.
West Texas Intermediate crude prices in both 2015 and 2016 are forecast to average $5 per barrel less than the Brent price.
“The recent price declines reflect concerns about lower economic growth in emerging markets, expectations of higher oil exports from Iran, and continuing actual and expected growth in global inventories,” the agency said.
Iran reached an agreement with the United States and five other Western powers in July to curb its nuclear program in exchange for the lifting of sanctions, including oil export sanctions.
The EIA said that, assuming western sanctions against Iran are rolled back in 2016, the oil rich country will add 0.3 million barrels per day of crude production from 2015 to 2016, with most of the production boost coming in the second half of 2016.
“If the agreement is implemented and sanctions relief occurs, it will put additional Iranian oil supplies on a global market that has already seen oil inventories rise significantly over the past year,” the EIA said.
Natural gas working inventories were 2.912 billion cubic feet on July 31, a 23 percent jump over last year and and 2 percent higher than the previous five-year average, the report noted.
The EIA projects inventories will close the injection season at the end of October at 3.867 Bcf, a level that would mark the second-highest end-of-October level on record.