1 million bpd output rise "good target", says Al-Falih

1 million bpd output rise

Countries in the OPEC oil cartel have agreed to a new oil output level that effectively increases production by nearly 1 million barrels per day.

He said the exact mechanics of how the proposal should be carried out will be decided among OPEC members at their meeting on June 22.

But on Friday, Saudi Arabia's energy minister Khalid al-Falih persuaded Mr Zanganeh to accept the proposal Riyadh and non-OPEC member Russian Federation had been championing.

The cartel would be the biggest beneficiary of possible Chinese tariffs on U.S. oil imports, as these could help it regain market share, OPEC sources and industry officials tell Reuters. Its oil minister, Bijan Namdar Zanganeh, told reporters that, "Some of the countries are against any increase, and ask them".

The 14-nation OPEC and its 10 non-member partner nations, known as OPEC+, are in the midst of an agreement that runs through the end of the year, under which they have trimmed production by 1.8 million barrels per day. While fuel rates have been falling over the last few days, current oil prices are still a far cry from the $45 per barrel a year ago.

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.

Saudi Arabia and Russia's desire to roll back production cuts has encountered fierce opposition from Iran and Venezuela, while U.S. President Donald Trump has lobbed the occasional rhetorical bomb at the cartel on behalf of consumers.

On Wednesday, U.S. crude closed at $65.74 a barrel, down from a peak of almost $73 last month, and Brent crude, the worldwide standard, closed at $74.61, down from $80.

Ministers have gathered in the Austrian capital to discuss a supply increase that would be equivalent to about 600,000 barrels a day, or 0.5 per cent of global supply.

Brent crude, which forms a substantial portion of India's crude oil basket, fell to as low as $72.94 per barrel on the spot markets from an opening to level of $74.46.

"There is a lot more at stake than just ticking a box and say: 'we got this out of the way", the minister said, nothing that "timing isn't critical for the government of Saudi Arabia".

Venezuela, in the throes of an economic crisis, is also opposed to easing the cartel's output curbs, as are several other countries, including Iraq and Nigeria, who would struggle to immediately increase production. "A more relaxed policy will push Brent towards $70 a barrel, while restrictive measures will support crude oil back towards $80".

"We are going to change this structure (of one million bpd)", he said as the meeting kicked off.

There is concern that a shortage and rising prices could cripple the global economy.

OPEC's deal to release more supply centres on the idea of returning to 100 per cent compliance with existing, agreed cuts.

Saudi Arabia and some other Persian Gulf producers have supported the United States in imposing sanctions on Iran.

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