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OPEC and allies agree to share oil production increase

OPEC and allies agree to share oil production increase”

"The only country that can increase production is Saudi Arabia, so its interpretation of the deal is the one that matters", said Ann-Louise Hittle, a veteran OPEC watcher at consultant Wood Mackenzie Ltd.

US President Donald Trump, whose tweets played a part in prompting Saudi Arabia to push for a production increase, indicated on Friday that he'll be watching the progress of their new agreement closely. That means the country has little to gain from a deal to raise Opec output, unlike top oil exporter Saudi Arabia.

He added that OPEC and non-OPEC countries combined would pump roughly an extra 1 million barrels per day, with OPEC accounting for most of the additional supply, recalling the 171st OPEC Conference Resolution reached on November 30, 2016 for a production adjustment of 1.2 million barrels a day for OPEC Member countries.

Major producers outside the Organisation of Petroleum Exporting Countries - including Russia, Mexico and Kazakhstan - met ministers from the cartel on Saturday (June 23) and endorsed a nominal output increase of 1 million barrels a day, said Ecuador's Minister of Hydrocarbons Carlos Perez. "Need to keep prices down!"

On Saturday, non-Opec oil producers agreed to participate in the pact but a communique issued after their talks with the Vienna-based group provided no concrete numbers amid deep disagreements between Opec arch-rivals Saudi Arabia and Iran.

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According to OPEC's recent decision, those countries that have produced less oil compared to others can increase production, the former envoy said.

The deal gave a tacit green light to Saudi Arabia to produce more than now allowed by Opec as the 14-nation organisation avoided setting individual country targets.

"The real increase of production would be a figure exactly close to 1 million", Novak said in an interview with Bloomberg television.

Al-Falih went out of his way to give a detailed explanation of how the so-called OPEC+ deal will work, clarifying a vaguely worded agreement and contradictory statements from other ministers that spurred a rally in crude futures on Friday.

But Falih said pro-rata quota reallocations did not have to be strict, meaning Saudi wanted to fill the gaps left by others.

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State oil company Saudi Aramco had anticipated this week's decision and was already ramping up output, Al-Falih said.

He also said Opec could hold an extraordinary meeting before its next formal talks due on December 3 or adjust deliveries in September, when its monitoring committee meets, if global oil supply fell further because of sanctions on Iran.

Opec and its allies have since previous year been participating in a pact to cut output by 1.8 million bpd.

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

An Iranian OPEC delegate immediately criticized the Saudi position, saying the agreement didn't allow any member to replace someone else's market share.

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"Venezuela told us that 300,000 bpd will come back", he said. "Falih can go back and say "we will be able to raise production to meet market needs". Its latest alliance has already defied many doubters as the world's two largest oil exporters - Saudi Arabia and Russian Federation - increasingly dominate policy discussions.



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