Oil prices have declined as an increase in US supply and slowing economic growth countered supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC), as well as US sanctions against Iran and Venezuela.

International Brent crude futures were down four cents at $66.41 per barrel, while US West Texas Intermediate (WTI) crude oil futures slipped back to $56.16 per barrel, Reuters reported.

In an effort to stabilise markets, OPEC member and leading crude exporter Saudi Arabia is expected to reduce light crude oil shipments to Asia next month.

Late last year, the oil cartel and some non-affiliated producers such as Russia agreed to reduce production by 1.2 million barrels per day (Mbpd) to prevent supply glut.

“We have lowered Saudi crude oil output in line with announcements.”

French bank BNP Paribas was quoted by the news agency as saying; “We have lowered Saudi crude oil output in line with announcements and are now assuming that Saudi Arabia will produce in the first three quarters of 2019 less than the 10.31Mbpd target it agreed to at the 7 December OPEC, non-OPEC meeting.”

Due to the output cuts, oil prices are expected to rally through the third quarter of this year, BNP said.

Imposed US sanctions on Iran and Venezuela gave some support to oil prices.

Refinitiv ship tracking data revealed that Iran’s crude exports were higher than expected last month and averaged around 1.25Mbpd, despite the sanctions.

Crude output in the US increased by more than 2Mbpd last year to a record 11.9Mbpd standing against the supply cuts and sanctions.

BNP Paribas added that an increase in US output will result in a reduction in oil prices towards the end of the year.