Published: Fri, June 22, 2018
Money | By Arnold Ball

1 million bpd output rise "good target", says Al-Falih

1 million bpd output rise

Opec used the opening of the meeting to make it clear the group did not want to see prices sliding too much because of a rise in supplies.

Benchmark Brent crude jumped $2.19 a barrel, or nearly 3 percent, to a high of $75.24 before slipping to around $75 by 1305 GMT.

Oil prices have spiked by as much as 20% this year, in part because OPEC has produced even less than was foreseen under the 2016 agreement, which was supposed to reduce supply by 1.8 million barrels per day.

"It would seem that an aggregate increase in production for OPEC+ of between 500,000 bpd and 1 million bpd is the range that is being considered", Tchilinguirian said.

Iran has so far been the main barrier to a deal, with Zanganeh saying OPEC should not yield to pressure from US President Donald Trump to raise output.

So far there is no indication that Iran and the other members would agree to such a reallocation, although with officials holding extensive talks in the run-up to Friday's Opec meeting, further compromise could be made.

The Organization of the Petroleum Exporting Countries (OPEC), a producer cartel de-facto led by top exporter Saudi Arabia, is meeting together with some non-OPEC members including top producer Russian Federation at its headquarters in the Austrian capital to discuss output policy. "We have a valid deal", Iran's Opec governor Hossein Kazempour Ardebili said, responding to a question whether the agreement would be adjusted on Friday.

Saudi Arabia is pushing for a hike in oil output, putting the fate of an 18-month-old supply-cut deal between OPEC members and allied countries credited with clearing a global oil glut and lifting crude prices in jeopardy.

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Opec and its allies have since previous year been participating in a pact to cut output by 1.8 million bpd.

Iran's Zanganeh has accused Trump of trying to politicise OPEC and said it was United States sanctions on Iran and Venezuela that had helped push up prices.

Khalid Al Falih, Saudi Arabia's energy minister.

"There is a lot more at stake than just ticking a box and say: 'we got this out of the way", the minister said, nothing that "timing isn't critical for the government of Saudi Arabia".

Other OPEC-members, including Iran, are against such a move, fearing a sharp slump in prices.

The current standoff was partially triggered by the United States, with Trump calling directly on Opec to raise output. Zanganeh has said the president is to blame for high prices because of his unilateral withdrawal from the global nuclear agreement.

The planned sale of 5 percent of Aramco-in what would likely be the world's largest IPO ever-could bring Saudi Arabia US$100 billion if Saudi officials' valuation of the company at US$2 trillion stands. He said OPEC could meet again in September to adjust the deal. "Nigeria under this scenario must build capacity to participate easily when OPEC expands its production", he said.

"This puts Saudi Arabia in a tough position, as unanimity is needed for any accord to be reached", it added.

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