VIENNA (Reuters) – OPEC meets with Russia and other allies on Saturday to conclude a new agreement to increase oil production, a day after agreeing to an increase in production within the group but confusing the market with respect to the amount of oil that will pump.
Organization of Petroleum Exporting Countries announced its OPEC-only agreement on Friday, but did not give clear production targets. Russia and other oil producers that do not belong to OPEC will now meet with OPEC in an attempt to secure their participation in the pact.
The reference price of Brent LCOc1 oil increased by $ 2.5 or 3.4 percent on Friday to $ 75.55 a barrel.
U.S. President Donald Trump was among those who wonder how much more oil OPEC will offer. "I expect OPEC to substantially increase production, we need to keep prices low!" Trump wrote on Twitter after OPEC announced its decision.
The United States, China and India have urged oil producers to release more supply to avoid an oil deficit that could undermine global economic growth.
OPEC said in a statement that it would increase supply by returning to 100 percent in accordance with previously agreed production cuts, but gave no concrete figures.
Saudi Arabia said the measure would result in an increase in nominal production of about 1 million barrels per day (bpd), or 1 percent of world supply, for OPEC producers and the OPEC.
Iraq said that the real increase would be around 770,000 bpd because several countries that had experienced production declines would have difficulty reaching full quotas. Iran said the real increase could rise to only 500,000 bpd.
Russian Energy Minister Alexander Novak said on Saturday he was happy with the decision, although he had previously pushed OPEC and OPEC to increase production by up to 1.5 million bpd.
"At this stage, the million is quite rational," he told reporters after arriving in Vienna, where OPEC is based.
FILLING THE GAPS
Iran, OPEC's third largest producer, had demanded OPEC to reject Trump's calls for an increase in oil supply, arguing that it had contributed to a recent price increase by imposing sanctions against Iran and his colleagues Venezuela.
Trump imposed new sanctions on Tehran in May and market observers expect Iran's output to decline by one third by the end of 2018. That means the country has little to gain from an agreement to increase OPEC production , unlike the main oil exporter, Saudi Arabia.
By failing to set individual targets, the OPEC agreement appeared to give Saudi Arabia the leeway to produce more than its previous OPEC quota and fill the gap left by those like Venezuela who can not pump enough to meet their demand. official assignment.
But Iranian Oil Minister Bijan Zanganeh said that was not the case: "Every country that has produced less (than its allocation) can produce more, those that can not, will not."
"This means that Saudi Arabia can increase its production by less than 100,000 bpd, Qatar can produce an additional 70,000 bpd," Zanganeh told Argus Media.
"But this does not mean that the production of Venezuela must be produced by another, Venezuela will increase its production when it can, and if it can not, others can not enter and produce on its behalf," Zanganeh said.
OPEC and its allies have been participating since last year in a pact to reduce production by 1.8 million bpd. The measure helped rebalance the market in the past 18 months and raised the LCOc1 of oil to around $ 75 per barrel from $ 27 in 2016.
But unexpected cuts in Venezuela, Libya and Angola have reduced supplies by 2.8 million bpd in recent months.
Saudi Arabia's energy minister, Khalid al-Falih, warned that the world could face a supply shortfall of up to 1.8 million bpd in the second half of 2018.
Graph: compliance with OPEC in May – Reuters Survey – reut.rs/2JRWnw1
"Both Arabia and Iran can show that they won," said an OPEC delegate.
"Zanganeh can return to his country and say 'I won', because we will keep the original agreement unchanged, Falih can go back and say 'we can increase production to meet market needs'.  Chart: Equilibrium between world oil supply and demand – reut.rs/2MB4tH3
Additional reporting by Alex Lawler, Shadia Nasralla and Rania El Gamal, Writing and editing by Dale Hudson and Dmitry Zhdannikov, Amanda Cooper's graphics