OPEC meets Russian Federation and allies to agree oil output boost

Ivan Schwartz
June 23, 2018

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

OPEC and non-member allies led by Russian Federation have agreed to raise oil production by a million barrels per day.

Vandana Hari, a market analyst and founder of Vanda Insights, told UPI early Friday that it appears OPEC will agree only on lowering compliance to 100 percent, rather than outlining any specific production figures for the second half of the year.

OPEC and non-OPEC producers will meet on Saturday to iron out details of the pact and then again in September to review the deal.

The contentious meeting took place under the shadow of vituperation from U.S. President Donald Trump, who anxious that high oil and gasoline prices would be politically painful ahead of midterm elections later this year. The minister said the difference between that amounts to "a little bit less than 1 million barrels". Iraq said the real increase would be around 770,000 bpd because several countries that had suffered production declines would struggle to reach full quotas.

Friday's decision means the Organization of the Petroleum Exporting Countries will observe the production level it agreed on in late 2016 when it cut output by 1.2 million barrels a day.

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The output gain is nominal.

Trump slapped fresh sanctions on Tehran in May and market watchers expect Iran's output to drop by a third by the end of 2018.

"But this does not mean that Venezuela's production should be produced by some other".

However, Saudi Energy Minister Khalid al-Falih convinced his Iranian peer Bijan Zanganeh to support the increase just hours before Friday's OPEC meeting.

The group planned to cut output by two percent, about 18 million barrels a day. Venezuela will raise its production when it can.

The agreement is set to help increase supply in the oil market without creating a glut. "We're taking our breath and focusing on the oil market", said Ryan Detrick, senior market strategist at LPL Financial in Charlotte, North Carolina.

Other reports by GizPress

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