Iran rejects plan to raise oil output within OPEC

Iran rejects plan to raise oil output within OPEC

Iran, OPEC's third-largest producer, says its output is likely to fall in the second half of this year due to new USA sanctions.

The cut has since then pushed up the price of crude oil by about 50 percent.

But Iran has called on the group to resist pressure from U.S. President Donald Trump, who moved to reimpose sanctions on Tehran last month after announcing he would pull the United States out of Iran's nuclear agreement with world powers. "Stay tuned." A decision to increase output could be taken with Iran refusing to sign up, as has happened before in Opec. "Need to keep prices down!"

Another big uncertainty for oil is the escalating dispute between the United States and its trading partners, which could hit USA crude oil exports to China.

Oil traders' attention is focused this week on Vienna, where ministers from the Organization of the Petroleum Exporting Countries and its allies must decide whether to increase their output in the second half of 2018.

OPEC and its allies are discussing an output increase of 1 million bpd or more to avert future shortages and stock declines.

According to the worldwide market leaders, the up in oil price is mainly due to the strong market demand to increase oil production ahead of today's OPEC meet which is anticipated to see oil-producing countries abandoning their historic supply pact in the second half of 2018 and raise oil output to meet global 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 lower prices". That means the country has little to gain from a deal to raise OPEC output, unlike arch-rival Saudi Arabia.

"It would seem that an aggregate increase in production for OPEC+ of between 500,000 bpd and 1 million bpd is the range that is being considered", Tchilinguirian said.

The tentative increase is less than many market participants feared, and helped buoy oil prices back above $75 a barrel from less than $73 a barrel earlier this week.

But production problems in Venezuela and Libya have seen about 2.8 million barrels removed from daily global supply.

The meeting is expected to be a tense affair. That crimped the country's ability to export crude, limiting supply and pushing up global prices. At the same time, higher Saudi Arabian production reduces spare capacity.

"Investor sentiments are shifting and they're no longer expecting a 1 million barrel a day rate hike", Benjamin Lu, a commodities analyst at Phillip Securities Singapore, told AFP.

Any further rebalancing will have to come from the demand side, where prices will have to rise high enough to moderate consumption growth.

There will be a deficit in the second half of this year of 1.6-1.8 million barrels.

OPEC's deal to release more supply centres on returning to 100 percent compliance with existing, agreed cuts.

But production has dipped more than expected thanks to factors including outages in Venezuela. OPEC ministers meet their non-OPEC counterparts on Saturday.

Zanganeh was due to attend a ministerial committee on Thursday, two sources said. Iran has been the disruption against what would otherwise be a clear agreement between Russian Federation and Saudi Arabia.

"Both Saudi and Iran can show that they won", an OPEC delegate said.

"We think this will go a long way in keeping the market from tightening", Falih told reporters.

"It will be 1m collectively", Mr Falih said as he left the meeting, although the final communique did not mention the figure. He said OPEC could meet again in September to adjust the deal.

The uncertainty heading into today's OPEC meeting has kept numerous major hedge funds on the sidelines for weeks because even with their resources, they have been unwilling to place bets on either side of the market, given the volatility usually associated with an OPEC meeting.

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