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Home/OPEC strives for oil deal to meet rising global demand
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OPEC strives for oil deal to meet rising global demand

OPEC is trying to convince fellow oil producers to raise output from July to meet rising global demand as Iran insists modest rise in output

OPEC's leader Saudi Arabia and Russia were trying on Thursday to convince fellow oil producers to raise output from July to meet rising global demand, with Iran still signalling it would support only a modest increase in supply.

The Organisation of the Petroleum Exporting Countries meets on Friday to decide output policy amid calls from top consumers such as the United States, China and India to cool down oil prices and support the world economy by producing more crude.

Russia, which is not in OPEC, has proposed producers raise output by 1.5 million barrels per day (bpd). Saudi Energy Minister Khalid al-Falih said on Thursday the world needed at least an extra 1 million bpd to avoid a shortage in the second half of 2018.

OPEC and its allies have since last year been participating in a deal to cut output by 1.8 million bpd. The measure has helped rebalance the market in the past 18 months and lifted oil <LCOc1> to around $73 per barrel from as low as $27 in 2016.

But unexpected outages in Venezuela, Libya and Angola have effectively brought supply cuts to around 2.8 million bpd in recent months. Iran's output is also likely to fall in the second half of this year due to new U.S. sanctions.

Iran, OPEC's third-largest producer, has so far been the main barrier to a new deal as it said on Tuesday OPEC was unlikely to reach an agreement and should reject pressure from U.S. President Donald Trump to pump more oil.

But on Wednesday, Iranian Oil Minister Bijan Zanganeh said OPEC members that had over delivered on cuts in recent months should comply with agreed quotas.

That would effectively mean a modest boost from producers such as Saudi Arabia that have been voluntarily cutting more deeply than planned.

A source familiar with Iran said that an increase is acceptable if justified from the demand side and if it is agreed by all OPEC members. An increase because of external pressure on OPEC is not acceptable.

Ecuador said OPEC and its allies could agree to a compromise increase in output of around 0.5-0.6 million bpd.