OPEC to boost oil production by 1 million barrels per day

OPEC strikes deal to boost oil production | TheHill

The price of oil jumped after the announcement, with the worldwide benchmark, Brent, gaining 2.5 per cent to US$74.84 a barrel in London, and USA crude climbing 4.9 per cent to US$68.72 a barrel in afternoon trading in New York-on track for its biggest one-day rise since OPEC agreed in November 2016 to cut production.

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.

"Saudi Arabia obviously can deliver as much as the market would need, but we're going to be respectful of the 1 million barrel cap - and at the same time be respectful of allocating some of that to countries that deliver it", Al-Falih said.

Al Jazeera's Paul Brennan explains why.

On Friday, the 14 member nations of OPEC agreed to raise crude oil production by up to 1 million barrels per day (bpd) from next month.

Oil prices have dipped in the last few weeks as investors expected an increase in production. Iraq said the real increase would be around 770,000 bpd because several countries that had suffered production declines would struggle to reach full quotas.

Friday's decision means the Organization of the Petroleum Exporting Countries will observe the production level it agreed on in late 2016, when it cut output by 1.2 million barrels a day. But in practice, major oil exporters will likely only be able to add about half that total to global markets, because many countries are already producing at capacity or face severe threats of supply disruption. "Hope OPEC will increase output substantially".

Saudi Arabia's Oil Minister Khalid al-Falih talks to journalists at the beginning of an OPEC meeting in Vienna, Austria, June 22, 2018. "This means that Saudi Arabia can increase its production by less than 100,000 bpd", Zanganeh told Argus Media. Russia, a non-member, is the second largest oil producer after Saudi. Nevertheless, we know only too well that as long as the ayatollahs are running an ideological political system in Tehran, there will be no similar progress in matters of regional compliance.

Oil hit almost $80 per barrel last month, sending gasoline prices in the United States above $3 per gallon in many areas for the first time in years.

The United States, China and India had urged OPEC to release more supply to prevent an oil deficit that would hurt the global economy. Compliance has been well above 100% this year since some countries, notably Venezuela, have seen a drop in production.

Markets were disappointed with the modest output hike, sending crude prices soaring on Friday.

Iran's Zanganeh has accused Trump of trying to politicise OPEC and said it was USA sanctions on Iran and Venezuela that had helped push up prices.

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