Iran may accept OPEC oil production increase with conditions: Iranian weekly

Oil prices rose as much as 2 percent on Friday as OPEC neared a deal to increase output to compensate for losses in production at a time of rising global demand.

A production increase on Friday would undo a cut agreed on in late 2016 that has since then helped push up the price of oil by nearly 50 percent.

Speaking after Thursday's meeting, Falih said Saudi Arabia and Russian Federation would recommend raising output by one million barrels a day in Friday's OPEC gathering and Saturday's meeting of non-OPEC allies.

OPEC's third-largest producer, Iran, has so far been the main barrier to a deal as it had said on Tuesday OPEC was unlikely to reach an agreement and should reject pressure from US President Donald Trump to pump more oil.

Bijan Namdar Zanganeh, Iran's oil minister, stormed out of the meeting on Thursday evening.

But it remains to be seen what kind of compromise could emerge, given Iran's deep aversion to any attempt by OPEC allies to offset its expected production losses as a result of the impending USA sanctions.

Three OPEC sources said that if the proposal was approved, all OPEC members and their non-OPEC allies could raise supplies pro-rata, with Saudi Arabia adding about 0.25-0.3 million bpd.

Nigerian Oil Minister Emmanuel Ibe Kachikwu, asked by reporters about his position on easing output cuts, said: "We need to discuss with our colleagues first before we make those decisions". Iran is usually not part of the committee, which includes Russia, Saudi Arabia, the UAE, Oman, Kuwait, Algeria and Venezuela.

Other Opec-members, including Iran, are against such a move, fearing a sharp slump in prices. US light crude was $1.00 lower at $64.71.

"You can not impose unilateral trade sanctions against two founding members of OPEC, two major oil producers. and at the same time expect the global oil market not to show tensions", he said.

While Saudi Arabia is pushing to lift the cap, Iran would prefer to take advantage of high prices ahead of the imposition of United States sanctions in November.

New Delhi, which imports about 80 per cent of its crude oil needs, has been urging responsible oil pricing that balances the interests of producers and consumers and supports the global economy.

OPEC, he said, "is not an organization to receive the instruction from President Trump and follow it".

The intensive negotiations between ministers in Vienna this week are the culmination of a process that has whipsawed oil markets for weeks.

Nigerian Energy Minister Emmanuel Kachikwu said that supply was ultimately likely to increase by 600,000 to 700,000 barrels a day.

For OPEC, over-compliance with its oil supply-cutting deal is a nice problem to have.

"We are going to change this structure (of one million bpd)", he said as the meeting kicked off.

But the direction of prices over the next year will be more influenced by less visible developments in the major oil-consuming countries, especially the United States, Europe, China and India.

"Many consumer countries are anxious" about potential oil shortfalls, he said, noting that global oil demand is expected to climb in the coming months.

  • David Armstrong