OPEC edges closer to raising oil output, Iran's agreement is key

Crude Oil

The world's major oil-producing countries are under pressure from the US, China and Russian Federation to pump more crude and bring down oil prices.

Speaking at the same event in Vienna, Iranian Oil Minister Bijan Namdar Zanganeh reiterated his country's resistance to hiking oil output and accused Trump of trying to politicise OPEC.

Brent reached a 3-1/2-year high above $80 a barrel last month but has fallen steadily in recent weeks as Saudi Arabia, de facto leader of Opec, has signalled it intends to raise production to stabilise prices. There are different views on how much to increase production and whether such a move should be gradual, one source said following a meeting of Gulf oil ministers on Tuesday evening.

"We will do whatever is needed to maintain market stability and ensure that there are no oil supply shortages", said Abdulaziz bin Salman, a Saudi prince and minister of state for energy affairs.

Saudi Arabia, under pressure from U.S. President Donald Trump, wants to unwind some of the cuts by engineering a "moderate" supply boost in the second half of the year.

"An increase is acceptable if justified from the demand side and if it is agreed by all OPEC members".

It remains to be seen whether they get Iran and others onboard for a formal Opec agreement, or go ahead with increases regardless.

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Ecuador said OPEC and its allies could agree to a compromise increase in output of around 0.5-0.6 million bpd.

"Globally, crude prices have gone beyond the threshold, which can be sustained by the world, particularly countries like India, which is a key driver of world economy", Mr. Pradhan said at an OPEC conference in Vienna.

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.

Iraq and Venezuela have also opposed a relaxation of production cuts, fearing a slump in prices.

Zanganeh was due to attend a ministerial committee on Thursday. Iraqi Oil Minister Jabar Al Luaibi said on Wednesday he hoped there would be agreement when Opec meets but added: "The oil market has not reached the level of stabilisation". Iran is usually not part of the committee, which includes Russia, Saudi Arabia, the UAE, Oman, Kuwait, Algeria and Venezuela.

Zanganeh told CNN on Wednesday that if OPEC returned to regular compliance, the real supply increase from the group would constitute around 460,000 bpd.