OPEC to boost oil production by 1 million barrels per day

OPEC strikes deal to boost oil production | TheHill

For about three weeks ahead of the Opec meeting, prices had retreated from 3-1/2-year highs on fears that larger production increases could lead to oversupply.

Trump weighed in again after Friday's OPEC decision was announced, tweeting: "Hope OPEC will increase output substantially".

But the joint communique did not spell out how the additional barrels would be divvied up, a key issue given Iran's insistence that cartel members should not be allowed to offset involuntary production losses in other member countries.

The "Declaration of Co-operation" agreement between Opec and allied non-Opec countries effective from January 1, 2017, has been very successful in balancing the market by reducing the overhang of a staggering 340mn barrels above the OECD (Organisation for Economic Co-operation and Development) five-year average commercial stock levels of 2.81bn barrels, he said.

"We have an agreement for a nominal increase of 1 million barrels a day (bpd)", Saudi Energy Minister Khalid Al-Falih said after the meeting.

Except for shale plays in the U.S., there is still a general hesitation in committing resources for oil exploration and development across the globe.

But unexpected outages in Venezuela, Libya and Angola have effectively brought supply cuts to around 2.8 million bpd in recent months.

Falih has warned the world could face a supply deficit of up to 1.8 million bpd in the second half of 2018 and that OPEC's responsibility was to address consumers' worries.

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Additionally, the current Venezuelan sanctions against the incumbent communist government of President Maduro prohibits buying or accepting as collateral any debt owed to the government or state owned PdVSA.

Ministers also acknowledged that production problems in several countries meant the real number of extra barrels coming to the market would be several hundred thousand less.

Taking a somewhat different stance, Russian Energy Minister Alexander Novak said Saturday's endorsement to increase oil production was based on "fundamental principles, on research done by our teams, by teams of our friends and colleagues, the OPEC secretariat". OPEC producers agreed to produce more oil.

"As a group we can meet the 100 percent compliance". US officials have asked Japan to completely halt oil imports from Iran, according to people with knowledge of the matter.

This week's OPEC talks in Vienna have been the most politically charged in years.

As a result, oil supplies fell deeper than expected, and oil prices rose more than expected. He also noted "the USA capital market and the ability to get lots of money very quickly" were going to be key indicators of future shale oil activities outside the market mechanism known as "oil prices". "More oil on the market means relatively lower prices for consumers".

Although higher prices are better for the oil industry, Wright says there must be a balance to prevent a dramatic spike in oil prices. On the upside, Crude oil prices also have the expected 1.44 mbpd increase in demand (up to 98.16 mbpd in 2018) for a Bullish case. Venezuela's production has dropped amid domestic political instability.

USA crude jumped 4.6 percent and Exxon Mobil advanced 2.1 percent. Crude prices in NY rose more than 3 percent to nearly $68 a barrel and rose about 2 percent in London to more than $74 a barrel.

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