Oil jumps as OPEC agrees to modest output hikes

Oil jumps as OPEC agrees to modest output hikes

Oil jumps as OPEC agrees to modest output hikes

Any decision to increase production during Friday's meeting is expected to see crude oil prices fall further.

Russian Federation and Saudi Arabia agreed to increase outflow by around 1.5 million barrels a day to steady the market as USA sanctions on Iran and political instability in Venezuela are expected to affect global production.

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.

"We need to release supply to the market", Saudi Arabian Energy Minister Khalid al-Falih told reporters in Vienna.

The cartel would be the biggest beneficiary of possible Chinese tariffs on U.S. oil imports, as these could help it regain market share, OPEC sources and industry officials tell Reuters.

Falih said the overwhelming majority of producers had recommended raising output by 1 million bpd, gradually and on a pro-rata basis. Trump has used Twitter to complain about high oil prices - and blame OPEC - twice since April.

Iraq's energy minister said it was clear that Opec and its allies would change course after 18 months of production curbs, in an effort to rebalance crude supply and demand.

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

"In the long term, this will have a negative effect on the global economy even if, in the short term, it might be positive for other non-US producers", Rainer Seele, chief executive at Austria's oil company OMV, said in Vienna where OPEC officials and ministers and top oil industry executives attended a seminar this week.

USA benchmark oil prices were slightly lower Thursday while oil prices in Europe and Asia were down sharply, as investors expect a likely decision Friday by global producers to pump more oil will impact overseas markets more than US markets.

As of Thursday afternoon, the two sides had not agreed on the size of any increase, said one delegate. It was up 1.2 per cent at $73.95 a barrel at 1:13 pm in Singapore on Friday. If we lose a million bpd of output from Venezuela and Iran in the fourth quarter, where will all these barrels come from?

For Opec, over-compliance with its supply-cutting deal is a nice problem to have.

Analysts have called this week's OPEC talks the most fractious and politically charged in years. Segun Ajibola expressed concern over Nigeria's inability to determine global realities, adding that outcome of market decision could frustrate implementation of the budget, considering that oil revenue remained the country's basic income.The re-balance in the oil sector had aided Nigeria to exit economic shortfall and boosted reserves but Ajibola was anxious about the country's continuous dependence on a single source of revenue.

Saudi Arabia and some other Persian Gulf producers have supported the United States in imposing sanctions on Iran.

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