Oil is rallying after OPEC reportedly strikes a deal to raise production

Oil is rallying after OPEC reportedly strikes a deal to raise production

Oil is rallying after OPEC reportedly strikes a deal to raise production

Scott Sheffield, executive chairman of Pioneer Natural Resource Co (PXD.N) said OPEC should boost output by roughly 1 million bpd over time to keep global crude supply and demand in balance as production dips elsewhere.

Ministers from the Organization of the Petroleum Exporting Countries and non-OPEC nations led by Russian Federation are meeting Friday and Saturday in Vienna, and it could be a hard and uncomfortable gathering.

The Saudi push is viewed as a bid to appease the United States which is on course to reimpose sanctions on the Islamic Republic, including on its oil sales.

"Iran rejected a potential compromise, saying it won't support even a small increase in oil production".

"Essner is betting that the Vienna meeting will yield an agreement to boost production by 500,000 to 800,000 barrels a day, far below the 1.5 million barrel figure floated recently by Russia's oil minister, Alexander Novak".

Saudi Arabia's Oil Minister Khalid al-Falih talks to journalists at the beginning of an OPEC meeting in Vienna, Austria, on June 22, 2018.

The correction in prices have been a continuing trend since May 23, when prices breached the $80 mark after the announcement of new USA sanctions on Iran and ongoing supply disruptions in Libya and Venezuela.

At stake is the fate of an 18-month-old supply-cut deal between members of the Organization of the Petroleum Exporting Countries and allied countries that has cleared a global oil glut and lifted crude prices.

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

Traders said a drop in Libyan supplies, including the loss of a 400,000-barrel storage tank, also helped support prices.

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Opec has a history of hard meetings as well as clashes between Iran and Saudi Arabia.

OPEC members and independent producers began in early 2017 to cut oil production by 1.8 million barrels per day in a bid to restore stability to oil markets.

"Any developments on OPEC can move us", said Phil Flynn, analyst at Price Futures Group in Chicago.

Last year, OPEC members unanimously agreed on the oil price of USD 60 dollars per barrel, by cutting oil output by 1.2 million barrels per day (bpd) to 32.5 million bpd.

Falih said the oil market had now rebalanced and his aim was to prevent a shortage of crude in future that could squeeze the market.

The prince said that Saudi Arabia is committed to balancing the market and OPEC is seeking to expand cooperation beyond the 24 producers participating in the current oil-cuts deal.

Zanganeh has said that if Opec returned to regular compliance, the group would raise output by around 460,000 bpd.

That means if a 1 million bpd output rise were agreed, OPEC would be allowed to increase output by around 650,000 bpd, of which Saudi Arabia could contribute over 200,000 bpd. He said OPEC could meet again in September to adjust the deal.

Iran says that OPEC and other major oil producers should stick with an agreement that curbs output.

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