Russian Federation backs OPEC oil output hike

Oil prices rose sharply after OPEC agreed to only a modest increase in output, well below some of the figures that had been discussed ahead of the meeting.

Trump weighed in again after Friday's OPEC decision was announced, tweeting: "Hope OPEC will increase output substantially".

The co-operation between Opec and allied non-Opec producers since January 1, 2017 has helped "stock overhang being brought down to nearly zero", HE the Minister of Energy and Industry, Dr Mohamed bin Saleh al-Sada said recently.

"Opec member countries have exceeded the required level of conformity that had reached 152pc in May 2018", Opec said in its communiqué.

Saudi Arabia promised to act decisively to keep oil prices under control, signalling a real supply boost approaching 1 million barrels a day is on the way to global markets.

Countries in the OPEC oil cartel have agreed to a new oil output level that effectively increases production by nearly 1 million barrels per day. This rare request from Washington came after USA retail gasoline prices surged to their highest point in three years and President Donald Trump publicly complained about Opec policy and rising oil prices.

Moscow had long argued for a hike, feeling the pressure from domestic oil companies eager to produce more so they can cash in on the higher prices.

While OPEC's largest producer, Saudi Arabia, is seen to be open to higher production, Iran has been hesitant because of its trouble to increase output and tensions with the U.S. President Donald Trump has been calling publicly for the cartel to help lower prices.

Overall, Crude oil prices may show weakness through the second half of 2018, with the prospect of OPEC production growth mostly influencing market psyche into a "Bearish" mode.

Analysts say supply increases are more likely to fall in a range between 600,000 to 800,000bpd.

"I agreed to have 100 percent of compliance, not more", Iran's Zanganeh said as he left OPEC headquarters on Friday. On that same note, United States oil stockpiles - whilst lingering near their five-year average from 2013 to 2018 - remain approximately 29 percent above their 2008-2013 five-year averages. Current compliance is around 40-50 percent above target because of production outages in Venezuela, Libya and Angola. "As individual countries, it is challenging", said United Arab Emirates Energy Minister Suhail bin Mohammed al-Mazroui.

The idea to bump output has been advocated by Saudi Arabia and Russian Federation, which sought to alleviate high prices through increased supply on the market without creating a glut.

Saudi Arabia and Iran stood side by side, and proved that politics can take a back seat when it comes to serving the best interests of OPEC members. "Falih can go back and say "we will be able to raise production to meet market needs".

The meeting of the ministerial monitoring committee of OPEC+, which usually proceeds from the recommendations and future scenarios of the technical committee, was held on June 21 in Vienna.

  • Eleanor Harrison