OPEC strives for new deal as Iran still wary of output hike

Friday, 22 June 2018 00:00 - - {{hitsCtrl.values.hits}}

Vienna (Reuters): OPEC’s leader Saudi Arabia and Russia were trying on Thursday to convince fellow oil producers to raise output from July to meet rising global demand, with Iran still signaling it would support only a modest increase in supply.

The Organization of the Petroleum Exporting Countries meets on Friday to decide output policy amid calls from top consumers such as the United States, China and India to cool down oil prices and support the world economy by producing more crude.

Russia, which is not in OPEC, has proposed producers raise output by 1.5 million barrels per day (bpd), effectively wiping out supply cuts of 1.8 million bpd that have helped rebalance the market in the past 18 months and lifted oil LCOc1 to around $75 per barrel. Oil traded as low as $27 in 2016.

Saudi Energy Minister Khalid al-Falih also said on Wednesday that the market demanded more oil in the second half of this year and that OPEC was moving towards “a good decision”.

OPEC’s third-largest producer, Iran, has so far been the main barrier to a deal as it said on Tuesday OPEC was unlikely to reach an agreement and should reject pressure from U.S. President Donald Trump to pump more oil. But on Wednesday, Iranian Oil Minister Bijan Zanganeh said OPEC members that had overdelivered on cuts in recent months should comply with agreed quotas.

That would effectively mean a modest boost from producers such as Saudi Arabia that have been cutting more deeply than planned despite production outages in Venezuela and Libya. Iran’s production is also likely to fall in the second half of 2018 due to new U.S. sanctions.

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

Zanganeh was due to attend a ministerial committee on Thursday. Iran is usually not part of the committee, which includes Russia, Saudi Arabia, the United Arab Emirates, Oman, Kuwait, Algeria and Venezuela.

Before the committee meeting, Zanganeh was also scheduled to meet Russian Energy Minister Alexander Novak for separate talks.

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