OPEC countries to pump more oil to contain price increase

OPEC countries to pump more oil to contain price increase

OPEC countries to pump more oil to contain price increase

The logo of the Organization of the Petroleoum Exporting Countries (OPEC) is seen at OPEC's headquarters in Vienna, Austria June 19, 2018.

OPEC agreed on Friday on a modest increase in oil production from July after its leader Saudi Arabia persuaded arch-rival Iran to cooperate amid calls from major consumers to help reduce the price of crude and avoid a supply shortage.

"The run-up to this OPEC meeting is fraught with uncertainty with Iran from the onset adopting a very entrenched opposition to any supply increase", Harry Tchilinguirian, head of oil strategy at French bank BNP Paribas, told Reuters Global Oil Forum.

Benchmark Brent crude prices traded at $74.35 a barrel on Thursday morning in London. Saudi Energy Minister Khalid Al Falih, asked whether he expected an easy meeting on Friday, said: "We will find out".

The upcoming June 22-23 meetings of OPEC and non-OPEC energy ministers are set to be the most contentious in a while, with several countries bristling at the thought of reversing a deal that has been in place for 18 months and helped lift oil prices to multi-year highs.

Brent crude LCOc1 fell $1.69 to settle at $73.05 a barrel.

Iranian oil minister Bijan Zanganeh said in an exclusive interview on Wednesday that previously agreed limits on production remain the best way to balance global oil supply, demand and prices. "Hope OPEC will increase output substantially".

Stocks of crude oil and refined products are now below their five-year averages and expected to continue falling in the second half of 2018 and through 2019.

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The statement did not say how exactly the production increase would be split between OPEC and non-OPEC nations. "These prices are creating stress throughout global economy, as it is giving pain to us in India", he said.

The world faces likely lower oil exports from Iran, Opec's third-biggest producer, after US President Donald Trump pulled out of a 2015 nuclear accord with a vow to renew sanctions against Tehran.

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

Opec inched closer to an agreement that would allow an oil-supply increase after positive talks between Saudi Arabia and Iran.

OPEC and non-members including Russian Federation have been participating since January 1 previous year in a deal to cut output by 1.8 million bpd.

"Yergin said Saudi Arabia and the United Arab Emirates support the current, tougher US policy toward Iran, Saudi Arabia's rival for influence in the region, and so will want to support Trump's call for lower prices".

Today's OPEC meeting is also highly important for the market watchers amid the growing trade tension between the U.S. and China, where both the countries have warned imposing import tariffs on each one's crude products.

As tensions mounted, the Iranian and Saudi ministers huddled for bilateral talks on Friday morning, holding up the start of the closely watched OPEC meeting.

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