OPEC inches towards oil output deal ahead of key meeting

Ivan Schwartz
June 21, 2018

But a member of Nigerian delegation to the event said as a loyal member, Nigeria will support the position of OPEC leadership to retain the current supply level in order stabilise the market.

The U.S. has reimposed sanctions, but it doesn't want its consumers to pay the price for that at the pump.

While U.S. oil production may not be quite up to the levels of oil giants Russian Federation and Saudi Arabia, losing the Chinese market would certainly deal a blow to American oil producers, which ship more than $1 billion of oil per month to Beijing.

Observers say the participating countries could simply agree to stop exceeding their quotas for cutbacks, and stick to the agreed target of trimming production by 1.8 million barrels per day (bpd).

De-facto OPEC leader and top crude exporter Saudi Arabia as well as Russian Federation which is not a member of the cartel but the world's biggest oil producer, are pushing for looser supply controls. The proposal has yet to win the backing of all OPEC members, and may meet resistance from more hawkish countries in the group including Venezuela and Algeria as well as Iran. Russian Federation is pushing for an even larger quota increase of 1.5 million barrels a day.

The decision sparked concerns in the US that China would turn to Iran as a potential oil supplier, buoying the Iranian market in the midst of the White House's reinstatement of hardline sanctions on Tehran.

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Iran had been expected to oppose any rise in crude output, but it has now signalled it may support a small increase. Zanganeh has said the president is to blame for high prices because of his unilateral withdrawal from the worldwide nuclear agreement.

Most of the shortfall has come from Venezuela, where an economic crisis has savaged the nation's petroleum production.

Brent crude futures, the global benchmark for oil prices, were at $74.55 per barrel at 0040 GMT, down 19 cents, or 0.3 percent, from their last close.

"OPEC is an independent organization, not an organization to receive instruction from President Trump", Zanganeh said on Tuesday.

OPEC takes its decisions by unanimity, so if Iran were to wield its veto Saudi Arabia would be left only with the option of assembling a coalition of willing countries to bypass Tehran's opposition.

Other reports by GizPress

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