Nigeria, S-Arabia, others disagree over oil supply

Jun 21, 2018, 17:55
Nigeria, S-Arabia, others disagree over oil supply

Oil officials from OPEC and its allies started to arrive in Vienna for this week's meeting, which is expected to be one of the most contentious summits in years, as Iran firmly opposes a Saudi-Russia-led production increase proposal, while a US shale executive urged OPEC to act to prevent oil prices from surging to $100 that will hurt both the cartel and Texas producers as it would dent demand.

Along with non-member Russia, Saudi Arabia is pushing hard to ease a production cap that has more than doubled oil prices to around $70 per barrel since 2016.

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

Oil prices surged almost 75 percent, touching $80 a barrel, after OPEC and allies agreed to cut production in late 2016.

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Iran previously said Venezuela and Iraq will join it in blocking a proposal to increase oil production by 1.5 million barrels per day worldwide.

An authoritative OPEC source disclosed in a telephone interview with Vanguard, yesterday, that while Saudi Arabia has openly canvassed for a huge increase in supply, Iran said it would compromise on a small increase in OPEC oil output.

The week ahead still sees a major and tense OPEC meeting on the table.

Iran has said that OPEC should stick to the terms of the production cut agreement, which took effect at the start of 2017 and is scheduled to run through the end of 2018.

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Saudi Arabia, under pressure from U.S. President Donald Trump, wants to unwind some of the cuts by engineering a "moderate" supply boost in the second half of the year.

"We will do whatever is needed to maintain market stability and ensure that there are no oil supply shortages", said Abdulaziz bin Salman, a Saudi prince and minister of state for energy affairs.

OPEC, together with other key producers including Russian Federation, started withholding output in 2017 to prop up prices, but a tightening market in 2018 led to calls by major consumers for more supplies. Zanganeh was due to attend a ministerial committee on Thursday, two sources said.

Iran's Oil Minister Bijan Zangeneh said, "I don't believe at this meeting we can reach agreement". Iran is usually not part of the committee, which includes Russia, Saudi Arabia, the UAE, Oman, Kuwait, Algeria and Venezuela.

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Higher oil prices spurred a jump in output from United States shale fields, but not enough to offset the output reductions by Opec and its allies.

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