OPEC and allies agree to share oil production increase

OPEC strikes deal to boost oil production | TheHill

"We're hoping to come out of this with a reasonable decision", Saudi Energy Minister Khalid al-Falih told reporters moments before the OPEC meeting opened.

The OPEC strategy now has stockpiles nearing the five-year average oil storage levels of the Organisation for Economic Co-operation and Development (OECD) countries.

The country's oil import bill including petroleum products, for May 2018 increased 49 per cent to $115 billion.

Front-month United States crude futures extended their rally during the session, trading as much as US$1.51 a barrel above the second month contract.

Kristian Rouz - International oil prices, along with USA energy stocks, posted gains in the aftermath of the most recent OPEC decision to increase oil production by less than previously expected.

On Friday, OPEC members agreed to start pumping more oil, though the agreement will not end the group's 18-month-old deal to limit output. Energy-related shares pushed up the index on higher oil prices.

Investors fear a possible decline in global demand, at the time this sector continues to detoriorate in Venezuela. His administration quietly asked Saudi Arabia and some other Opec producers to increase oil production by about 1mn bpd.

Zanganeh has said that if OPEC returned to regular compliance, the group would raise output by around 460,000 bpd. Crude oil price in India surged from $50.57 bbl in May previous year to $75.31 bbl this May.

The contentious meeting took place under the shadow of vituperation from U.S. President Donald Trump, who anxious that high oil and gasoline prices would be politically painful ahead of midterm elections later this year.

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"Need to keep prices down!" he tweeted. Trump wrote on Twitter after OPEC announced its Friday decision.

Saudi Arabia said the move would translate into a nominal output rise of around 1 million barrels per day (bpd), or 1 percent of global supply.

Questions remain over the ability of some OPEC nations - Iran and Venezuela in particular - to increase production as they struggle with domestic turmoil and sanctions. If this happens, then the future of OPEC itself as an organisation will be under threat and it may pave the way for a new global energy realignment between countries, especially between Saudi Arabia and Russian Federation to go their own way, along with a few like-minded Gulf allies.

Some traders were far from confident that such an agreement will meet the multiple challenges OPEC faces.

Al-Falih also said leaders from other countries including India, China and South Korea had also expressed concerns to him that their economies were "starting to feel the pinch of higher oil prices". While in theory that could mean extra output of 1mn bpd, in practice the figure could be lower - 600,000 bpd to 800,000 bpd - as some producers are unable to pump more. Those which can not, will not.

Some analysts note that while Trump has blamed OPEC, his policies have also helped increase the cost of oil by, for example, limiting exports from Iran.

But Falih said pro-rata quota reallocations did not have to be strict, meaning Saudi wanted to fill the gaps left by others.

Storage has fallen as Gulf Coast refiners have soaked up crude that was available at a discount, said Bob Yawger, director of Energy at Mizuho.

Additionally, in a sign of strong demand, USA refineries processed a seasonal record of 17.7 million barrels per day (bpd) of crude oil last week, according to the EIA.

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