Oil prices slid Thursday following news that the Organization of Petroleum Exporting Countries (OPEC) boosted output last month. The headlines pressured oil exchange traded products, including the United States Oil Fund (NYSEArca: USO), which tracks West Texas Intermediate crude oil futures.

USO is lower by more than 4% over the past week. Recent domestic inventory data has also been a help to crude prices and the related ETFs. Analysts argued that the continued drawdowns in oil stockpiles, even though we are past the summer driving season, are a result of increased U.S. crude oil exports, which have been supported by the widening differential between U.S. benchmark WTI prices and the global benchmark, Brent crude.

Looking to offset production losses from OPEC members Iran and Venezuela, the cartel saw members such as Angola, Nigeria, Saudi Arabia and United Arab Emirates boosted output last month. OPEC’s September output increased 132,000 barrels per day (bpd) to around 32.8 million bpd.

“Iranian and Venezuelan oil production levels, along with the pace of US shale growth, will drive oil prices in the medium term,” Fitch Ratings says. “Supply constraints at a time of steadily growing demand are leading the Brent price to spike above USD80/bbl.”

Lost Output, Sanctions

Recently, the U.S. levied new economic sanctions against Iran, causing a drop in oil output there.

“Upcoming US sanctions against Iran already caused the country’s output to drop by 350 thousand barrels per day (mbpd) in September,” according to Fitch. “We believe at least 1 million barrels per day (mmbpd) may be at risk unless sanction waivers and exemptions remove pressure to cut production further.”

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