OPEC agrees to increase oil production

OPEC agrees to increase oil production

OPEC agrees to increase oil production

The minister, Carlos Pérez, also said he did not expect OPEC and its partners to raise oil output by 1 million barrels per day - a figure mentioned by OPEC sources as a compromise - saying an increase of closer to 600,000 bpd was more likely.

OPEC will meet again on Saturday with non-members, including Russian Federation, to ratify Friday's agreement.

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.

Benchmark oil prices have already risen by around 70 percent over the a year ago, which should help restrain consumption growth.

Ministers from the Organization of the Petroleum Exporting Countries are meeting Friday in Vienna for what could be a hard gathering.

Reuters reported that the reinstitution of US sanctions in November could cut Iran's oil output of almost 4 million barrels a day by a third.

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Saudi Arabia and its allies estimate that total cuts now amount to 2.8 million barrels.

Russia, which is not in Opec, has proposed producers raise output by 1.5 million bpd.

The move comes amid soaring crude prices and output disruptions in several member countries, including Venezuela, Iran and Angola.

Tehran is concerned that an increased supply of crude on the market would make it easier for the U.S. to pressure allies to support a ban of Iranian oil similar to the one imposed under the Obama administration.

"Today's EIA report appeared unequivocally bullish to WTI given a much larger than expected crude stock draw of nearly six million barrels that was more than double our anticipated increase", Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois, said in a note. The rig count is a leading indicator of production.

Zanganeh said that Iran would try to maintain its export levels in the face of USA sanctions. Venezuela's oil industry is collapsing due to years of mismanagement and an economic crisis.

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A breakdown in talks would threaten the pact agreed in late 2016 to cut output by 1.8 million barrels per day (Mbd)-a level that has seen over-compliance of 152 percent, according to last night's monitoring committee meeting. But problems in Venezuela, Mexico and other nations mean the reduction in May was far higher.

The tentative increase is less than many market participants feared, and helped buoy oil prices back above $75 a barrel from less than $73 a barrel earlier this week. U.S. President Donald Trump has been lobbying the cartel to help lower prices.

Trump's involvement makes it hard for Tehran to accept a compromise.

Iran had balked at the request because it faces sanctions after President Donald Trump ripped up an global nuclear agreement. OPEC ministers meet their non-OPEC counterparts on Saturday.

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.

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