The price spread between US benchmark WTI and Brent has widened to more than $7 a barrel.
"In Venezuela, the pace of decline of oil production is accelerating and by the end of this year output could have fallen by several hundred thousand barrels a day", the IEA said.
However, the tailwinds for crude oil now vastly outnumber the headwinds, so prices will likely continue upwards in the coming days, especially in light of the escalation in Israel following the move of the US embassy from Tel Aviv to Jerusalem that ignited protests in Gaza, prompting an immediate military response from the IDF.
Crude oil continues to remain glued to three-year highs and WTI crude prices testing the 72.00/barrel price level as Middle East tensions continue to bolster oil prices.
Moreover, in a monthly oil market report released Monday, the Organization of the Petroleum Exporting Countries (OPEC) raised its forecast for global oil demand in 2018, expecting the world to consume 98.85 million barrels a day, or 1.65 million barrels a day higher than past year.
The recent decision by US President Donald Trump to withdraw from the Iran nuclear agreement has raised fears that renewed sanctions by Washington could severely hit production from the Middle East state, which now produces 3.8 million bpd and exported 2.6 million bpd last month - making it Opec's third-largest supplier. The spread between the two crudes will be watched by traders as speculation swirls over how OPEC producer Iran's exports will be affected after American President Donald Trump renewed sanctions on the Persian Gulf state.
The tightening market has all but eliminated a global supply overhang that depressed crude prices between late 2014 and early 2017. The rising oil prices are also giving the government a headache as a chunk of its annual budget will now be required in its purchase, thereby compromising on other social sectors.
Refinery runs in March also jumped to a record as import quotas for the small independent refiners-the so-called "teapots"-were increased and refinery margins stayed healthy".
Still, "we don't expect China to reduce its imports of crude from Iran given their long-term signed contracts and the ability to pay in yuan", said Abhishek Deshpande, the head of oil market research & strategy at J. P. Morgan.
The Organization of the Petroleum Exporting Countries reduced its forecast for global oil production in its most recent report.
The agency estimates that global oil inventories fell an average of almost 0.6 million barrels per day (bpd) in each of the past five quarters (January 2017 through March 2018).