Oil ministers back output hike despite Irans walkout

22 June, 2018, 22:43 | Author: Corey Lynch
  • High oil prices hurting fiscal balance, says Pradhan

OPEC and Russian Federation agreed previous year to cut production by 1.8 million barrels a day to lift oil prices, which had fallen to a low of $27 in 2016. A separate meeting of OPEC members and non-members, .

Saudi Arabia Energy Minister Khalid al-Falih has warned the world could face a supply deficit of as much as 1.8 million barrels per day in the second half of the year.

Iraqi Oil Minister Jabar Al Luaibi said on Wednesday he hoped there would be agreement when Opec meets but added: "The oil market has not reached the level of stabilisation".

Bijan Namdar Zanganeh, Iran's oil minister, stormed out of the meeting on Thursday evening.

"Investor sentiments are shifting and they're no longer expecting a 1 million barrel a day rate hike", Benjamin Lu, a commodities analyst at Phillip Securities Singapore, told AFP.

Iran's Zanganeh has accused Trump of trying to politicise OPEC and said it was U.S. sanctions on Iran and Venezuela that had helped push up prices.

He said Trump had contributed to the rise in prices by imposing sanctions on OPEC members Iran and Venezuela, which will likely lead to lower exports.

OPEC agreed on Friday on a modest increase in oil production from July after its leader Saudi Arabia persuaded arch-rival Iran to cooperate amid calls from major consumers to help reduce the price of crude and avoid a supply shortage.




The real increase, however, will be around 770,000 bpd, according to Iraq, because several countries that recently suffered production declines will struggle to reach full quotas, while other producers may not be able to fill the gap.

Oil prices have been on a roller-coaster ride over the last few years, with the worldwide marker, Brent, trading above $100 a barrel for several years until 2014, dropping to nearly $26 in 2016 and then recovering to over $80 last month.

In an historic agreement in late 2016 the OPEC+ group of 24 nations chose to cut 1.8 million barrels of production to revive the oil market from its biggest slump in a generation.

More important to Saudi Arabia than extra petrodollars is containing Iran, its arch-nemesis.

So far there is no indication that Iran and the other members would agree to such a reallocation, although with officials holding extensive talks in the run-up to Friday's Opec meeting, further compromise could be made. He said the meeting would tackle over-compliance with oil output cuts and that Iran was "very cooperative".

Domestic crude oil production falls by 2.95%.

Oil prices surged almost 75 percent, touching $80 a barrel, after OPEC and allies agreed to cut production in late 2016.

"I am sure we will come to consensus, and we will look back at this meeting as being equally important to the one we had in late 2016 when we chose to take that first action we took as 24 countries of restricting supply to bring stability back to the market", he added. Iran is usually not part of the committee, which includes Russia, Saudi Arabia, the UAE, Oman, Kuwait, Algeria and Venezuela.

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