Published: Fri, June 22, 2018
Economy | By

OPEC moves toward raising oil supply as Iran softens positions

OPEC moves toward raising oil supply as Iran softens positions

Moscow and Riyadh have argued that OPEC should heed calls from major oil-consuming countries like China, India, and the United States to lift their 2016 production freeze to rein in rising oil prices.

"We need to continue to tread carefully; none of us want to see the return of the kind of volatility that allows pessimism to return to the markets", Suhail Mohamed Al Mazrouei, the UAE energy minister and president of the Opec conference, said.

After Zanganeh left, Saudi Energy Minister Khalid al-Falih said an overwhelming majority of oil producers agreed with the Russian-Saudi recommendation of jointly and gradually raising output by 1 million barrels a day. The talks, held as the cartel hosted an global energy conference attended by hundreds of officials, executives and investors, will shape oil prices, energy stocks and currencies of petroleum-exporting countries for months to come.

The oil market would normally hear a decision, and typically react, on the same day as the meeting of OPEC members, which is set for this Friday, "but this time could be different", said Phil Flynn, senior market analyst at Price Futures Group.

Zanganeh, speaking to reporters on the sidelines of a Vienna seminar earlier this week, accused Trump of trying to politicize OPEC and said it was U.S. sanctions on Iran and Venezuela that had helped push up prices.

Brent crude oil futures LCOc1 were at $74.04 per barrel at 0308 GMT, up 99 cents, or 1.4 percent, from their last close.

Reuters reported that the reinstitution of us sanctions in November could cut Iran's oil output of almost 4 million barrels a day by a third.

The odds of OPEC reaching an oil-production deal increased as Iran edged away from a threat to veto any agreement that would raise output and Saudi Arabia put forward a plan that would add about 600,000 barrels a day to the global market.


Falling production in Venezuela and Libya, as well as the risk of lower output from Iran as a result of USA sanctions, have all increased market worries of a supply shortage.

The 24 nations in the pact, known as OPEC+, are now keeping more than two million bpd off the market.

Other OPEC-members, including Iran, are against such a move, fearing a sharp slump in prices.

Riyadh has said it is ready "to mitigate the effects of any supply shortages" from U.S. sanctions on Iran's oil.

"That would be a good target to work with", Al-Falih said on the eve of an OPEC summit in Vienna, Austria.

"OPEC could keep the same deal with compliance going back to 100%", said an OPEC source who is aware of Iran's stance.

OPEC sources also said Iran had demanded that US sanctions be mentioned in the group's post-meeting communiqué, as Tehran has blamed USA measures for the recent rise in oil prices.

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