OPEC agrees ouput rise of 'about' 1 mln barrels: Saudi

OPEC agrees ouput rise of 'about' 1 mln barrels: Saudi

OPEC oil
Saudi Arabia, backed by non-OPEC member Russia, is racing to convince the cartel to raise production. (AFP/Amer HILABI)

VIENNA: OPEC members have agreed on a combined increase in crude oil output of 1 million barrels per day, the oil minister of the cartel's kingpin Saudi Arabia said Friday (Jun 22).

"I am pleased that at the end of the day we reconciled around the 1 million figure that we have been talking about," said Khaled al-Faleh after a meeting of the Organization of the Petroleum Exporting Countries.

Support for the increase, which had been proposed by Saudi Arabia against objections from Iran, was unanimous, he said.

The real increase will be smaller because several countries that recently underproduced oil will struggle to return to full quotas while other producers will not be allowed to fill the gap, OPEC sources have said.

The United States, China and India had urged OPEC to release more supply to prevent an oil deficit that would hurt the global economy.

Saudi Arabia and Russia said they were happy to pump more but Iran had criticised the idea as it faces export-crippling US sanctions.

Iran, OPEC's third-largest producer, had demanded OPEC reject calls from US President Donald Trump for an increase in oil supply, arguing that Trump had contributed to a recent rise in prices by imposing sanctions on Iran and Venezuela.

Trump slapped fresh sanctions on Tehran in May and market watchers expect Iran's output to drop by a third by the end of 2018. That means the country has little to gain from a deal to raise OPEC output, unlike top oil exporter Saudi Arabia.

However, Saudi Energy Minister Khalid al-Falih appears to have convinced his Iranian peer Bijan Zanganeh to support the increase just hours before Friday's OPEC meeting.

"I think it will contribute significantly to meet the extra demand that we see coming in the second half," the Saudi minister said.

OPEC and its allies have since last year been participating in a pact to cut output by 1.8 million bpd. The measure has helped rebalance the market in the past 18 months and lifted oil to around US$75 per barrel from as low as US$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.

Oil prices rose almost 3 per cent after OPEC agreed to the modest increase.

Benchmark Brent crude jumped US$2.19 a barrel, or almost 3 per cent, to a high of US$75.24 before slipping to around US$75 by 1305 GMT. US light crude was US$1.80 higher at US$67.34.

Source: Reuters/AFP/aj