Saudi Arabia and Russia are discussing raising OPEC and non-OPEC Crude Oil production by some 1-M BPD.
OPEC’s Chief said a complaint from US President Donald Trump over high prices triggered the plan to expand Crude Oil output.
Riyadh and Moscow are prepared to ease output cuts to calm consumer worries about supply adequacy, their energy ministers said Friday, with Saudi Arabia’s Khalid al-Falih adding that any such move would be gradual so as not to shock the market.
Raising production would ease 17 months of strict supply curbs amid concerns that a price rally has gone too far, with ICE Brent Crude Oil having hit its highest since late Y 2014 at 80.50 bbl.
OPEC began a discussion about easing production cuts following a critical Tweet from President Trump, OPEC’s Secretary-General Mohammad Barkindo said.
President Trump Tweeted last month that OPEC had “artificially” boosted Crude Oil prices.
“We pride ourselves as friends of the United States,” SG Barkindo told a panel with the Saudi and Russian energy ministers in St. Petersburg at Russia’s main economic forum.
The Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia have agreed to curb output by about 1.8-M BPS through Y 2018 to reduce global stocks, but the inventory overhang is now near OPEC’s target.
In April, pact participants cut production by 52% more than required, with falling output from crisis-hit Venezuela helping OPEC deliver a bigger reduction than intended.
An increase of about 1-M BPD would lower compliance to 100% of the agreed level.
Crude Oil prices fell more than 2% towards 77 bbl Friday as Saudi Arabia and Russia said they were ready to ease supply curbs.
Russian Energy Minister Alexander Novak said current cuts were in reality 2.7-M bbl due to a drop in Venezuelan production, around 1-M bbl higher than the initially agreed reductions.
Talks are being led by the energy ministers of OPEC kingpin Saudi Arabia and Russia at St. Petersburg this week along with their counterpart from the United Arab Emirates, which holds the OPEC presidency this year, the sources said.
OPEC and non-OPEC ministers meet in Vienna on 22-23 June and the final decision will be taken there.
OPEC may decide to raise Crude Oil output as soon as June due to worries over Iranian and Venezuelan supply and after Washington raised concerns the Crude Oil rally was going too far, OPEC and oil industry sources told Reuters early this week.
The rapid decline in oil inventories and worries about supplies after the U.S. decision to withdraw from the international nuclear deal with Iran, as well as Venezuela’s collapsing output, were behind the change in OPEC’s thinking according to our sources.
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