Date :Sunday, June 24th, 2018 | Time : 13:19 |ID: 64786 | Print

OPEC reaches deal to boost oil output after Iran’s approval

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SHAFAQNA – Leaders from the Organization of the Petroleum Exporting Countries (OPEC) agreed on Friday to raise oil production by around 1 million barrels per day from next month after a week of tense negotiations.

OPEC’s de facto leader Saudi Arabia and non-OPEC Russia have said a production increase of about 1 million barrels per day (bpd) or around 1 percent of global supply had become a near-consensus proposal for the group and its allies.

The Organization of the Petroleum Exporting Countries will be gathering in Vienna amid calls from top consumers the United States, China and India to cool down the price of crude and prevent an oil shortage that would hurt the global economy.

Iran, OPEC’s third-largest producer, has so far been the main barrier to a deal as it called on OPEC to reject pressure from U.S. President Donald Trump to pump more oil.

Trump imposed fresh sanctions on Tehran in May and market watchers expect Iran’s output to drop by a third by the end of 2018. That means the country has little to gain from a deal to raise OPEC output, unlike arch-rival Saudi Arabia.

Saudi Energy Minister Khalid al-Falih said the overwhelming majority of producers had recommended raising output by 1 million bpd, gradually and on a pro-rata basis.

OPEC and its allies have since last year been participating in a pact to cut output by 1.8 million bpd. The measure has helped rebalance the market in the past 18 months and lifted oil LCOc1 to around $74 per barrel from as low as $27 in 2016.

But unexpected outages in Venezuela, Libya and Angola have effectively brought supply cuts to around 2.8 million bpd in recent months.

Brent oil prices were up 1 percent LCOc1 on Friday, Reuters reported.

According to the US Bloomberg news and media company, Zangeneh upon arrival in Vienna on June 20 told reporters that oil should not be utilized as a “weapon or a political tool against other countries.”

Asked by IRNA on Friday about increase in OPEC oil production, Zangeneh said the claim about daily pumping one million barrels of extra oil is just a move to send message to the US.

Zangeneh added some say that the OPEC conference has agreed to raise production by one million barrels per day, but there is no figure in this [OPEC] statement.

“The OPEC idea is only what we agreed and signed.” the Iranian petroleum minister also talked of the claim about pumping 1.8 million oil barrels per day into the market, saying “There is no such capacity in the world,” adding some like US President Donald Trump think in vain that there is an additional mega capacity which can be a substitute for omission of Iran.

He went on to say that from ten OPEC and non-OPEC members which signed the statement, seven have no production capability.

OPEC has currently 14 members.

Asked whether the agreement between Moscow and Riyadh to increase oil output will make up for Venezuela and other producers, Zangeneh said the OPEC statement says nothing about the issue.

Russia can just transfer the oil within the Organization’s framework set for the non-OPEC members, Zangeneh added, stressing “In OPEC, no country can be a substitute for another.”

The minister noted any remarks out of the OPEC statement is a message to the United States.

Zangeneh further predicted that the amount of oil which may pump into the market will be less than half a million barrels per day, 300,000 of which will be produced by Russia and the rest by Saudi Arabia.

According to OPEC statement, Moscow and Riyadh cannot increase the output more than the mentioned figure, Zangeneh said.
Referring to the US unilateral sanctions against Iran, Zangeneh said Iran’s exit from the oil market will cost [the world] a lot.

OPEC sources also said Iran had demanded that U.S. sanctions be mentioned in the group’s post-meeting communique, as Tehran has blamed U.S. measures for the recent rise in oil prices.

The United States, which rivals Russia and Saudi Arabia for the position of world No.1 oil producer, is not participating in the current supply pact.

 

Read more from Shafaqna:

OPEC nervous as Iran resumes delivery to Europe

REPORT – Iran third leading OPEC producer in May

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