OPEC reaches deal to modestly raise oil output from July

OPEC reaches deal to modestly raise oil output from July

Iran has rejected a plan by Russian Federation and Saudi Arabia to increase oil production at a meeting of the OPEC oil cartel this week in response to consumer disgruntlement with rising prices.

Global oil supplies were already getting tight before President Donald Trump vowed to exit the Iran nuclear deal and impose "powerful" sanctions on the OPEC nation.

She said OPEC ministers had acted as "their own worst enemies" by warning this week of a potential shortage of around 2 million barrels per day in the second half of 2018. Assuming that the main production continues, that will continue to drive inventories down, we think that that would be, you know, probably too short of a supply situation, that we can not allow to happen.

"The most important thing is the consumers", Saudi Energy Minister Khalid Al-Falih said Thursday.

The Saudi proposal involves a complex calculation based on how much the group has cut production beyond the initial target of 1.8 million barrels a day set in 2016, said delegates, asking not be named discussing private meetings.

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. And after OPEC's deal on Friday, Trump tweeted: "Hope OPEC will increase output substantially".

While fuel rates have been falling over the last few days, current oil prices are still a far cry from the $45 per barrel a year ago.

The president of the United States doesn't have any problem with increased oil prices since this leads to raising Shale productions, said the minister, adding, "however in public, he shows opposition and blames the OPEC while these conditions are not created by OPEC but by the U.S. administration".

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UAE's Energy Minister Suhail Mohamed Al Mazrouei arrives for the Opec meeting in Vienna.

Output has also plummeted in Libya, where fighting between rival factions has damaged key oil infrastructure. As demand now outstrips supply, OPEC members are expected to vote on whether to modify an 18-month-old production cap in order to stabilise prices by abolishing or increasing the cap. US light crude CLc1 was 5 cents higher at $65.12.

Venezuela likewise has railed against USA sanctions that have hampered state oil company PDVSA's ability to finance its operations.

- OPEC could distribute the increase unevenly to allow those that can produce more - Saudi Arabia, Kuwait and the United Arab Emirates - to fill in for those that cannot, although this could face resistance from countries reluctant to give up market share such as Iran.

The deal looked to be in line with many analysts' forecasts.

"They (Iran) have requested that but I don't think it will go anywhere", Pérez said.

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

Still, some analysts believe that a combination of the OPEC deal, USA oil, and an easing of American demand for energy should eventually contribute to lower oil prices, which in May hit their highest levels in more than three years.

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