DUBAI (Reuters) – OPEC is monitoring the riots in Iran and the economic crisis in Venezuela, but the group will only increase production if there are significant and sustained production interruptions in those countries, an important source of OPEC's an important Middle Eastern oil producer said.
Venezuela's economic problems have affected the country's oil production, which is at lows close to 30 years, but Iran's output has not been affected by a wave of anti-government protests.
Traders said that political tensions in Iran, the third largest producer of the Organization of Petroleum Exporting Countries (OPEC), had pushed prices higher.
Brent LCOc1 crude, the international benchmark, was trading at around $ 67.52 per barrel on Monday. Brent hit a high of $ 68.27 last week, the highest since May 2015, on tensions in Iran.
Saudi Arabia, OPEC de facto leader, wants to see oil prices above $ 60 per barrel, to boost the valuation of its national oil company Aramco before an initial public offering (IPO) later this year year and reduce the gap in its state budget, Saudi sources said.
"Even if there were an interruption in the supply (of Iran or Venezuela) … OPEC will not increase production," said OPEC's principal source.
"OPEC's policy is to bring inventories to normal levels and stay the course, unless the supply disruption of something like 1,000,000 barrels per day persists for more than a month and causes shortages of supplying crude to consumers ".
The deteriorating Venezuelan energy sector is struggling due to US sanctions and the lack of capital coercion operations, and its economic crisis threatens to cause further damage to the OPEC country.
The main source of OPEC also said that the oil market was on track to be rebalanced, but so far, global oil inventories remained above their five-year average and much more time was needed to drain oil. excess oil.
"Any change in production limits should be driven by a change in the fundamentals of the market and not just by speculation for a short period of time, for OPEC to change the production ceiling," he said.
Protests in Iran that began in late December have not posed an immediate threat to oil production, but there is concern that US President Donald Trump may re-impose sanctions on Iranian oil, which could disrupt oil prices. oil exports.
Trump must decide in mid-January whether he will continue to relinquish US sanctions. UU On Iran's oil exports under the terms of an international nuclear agreement.
The main source of OPEC said that while more US sanctions were possible on Iranian oil, it would take time to affect the oil supply and therefore its impact was difficult to measure.
OPEC, with the support of Russia and other countries that are not members, began to reduce production a year ago to eliminate an excess of oil accumulated in the previous two years. Compliance has been high, as producers decided to extend the supply agreement until the end of 2018.
OPEC cuts are helping to reduce global inventories, even as production continues to increase in the United States. The production of EE. UU It increased to 9.78 million barrels in the last week.
Information of Rania El Gamal. Edition by Dmitry Zhdannikov and Jane Merriman