Saudi energy minister says market demands more oil in H2

24 June, 2018, 15:02 | Author: Elaine Woods
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Saudi Arabia and Russian Federation said they were happy to pump more but Iran had criticised the idea as it faces export-crippling United States sanctions.

Keeping with the narrative that OPEC is working toward market stability, Mohamed Al Mazrouei, the UAE oil minister and president of the OPEC Conference, said that the organization is motivated by boosting prices to stimulate investment over the long term, as more than $10 trillion is needed to increase supply to meet global demand growth.

Joe McMonigle, an analyst with Hedgeye who is in Vienna to observe the OPEC proceedings, said he doubts the producer group would approve any language on sanctions.

Tehran is concerned that an increased supply of crude on the market would make it easier for the U.S. to pressure allies to support a ban of Iranian oil similar to the one imposed under the Obama administration. Riyadh could also act unilaterally boosting output, as it did in 2011 after a meeting ended in acrimony without a deal. Trump wrote on Twitter after OPEC announced its decision.

If a 25 percent duty on US crude imports is implemented by Beijing, American oil would become uncompetitive in China, forcing it to seek buyers elsewhere.

Logo of Organization of the Petroleoum Exporting Countries is seen at OPEC's headquarters in Vienna. "How much oil do we need?. around 1 million (barrels per day, bpd) probably".

Iran, OPEC's third-largest producer, has so far been the main barrier to a deal as it called on OPEC to reject pressure from U.S. President Donald Trump to pump more oil.

Zanganeh has said the president is to blame for high prices because of his unilateral withdrawal from the worldwide nuclear agreement and the imposition of fresh sanctions that could significantly curb Iran's crude exports.

OPEC and its allies exceeded their pledged 1.8 million barrels a day of production cuts by 47 percent last month. The measure has helped rebalance the market in the past 18 months and lifted oil to around $74 per barrel from as low as $27 in 2016.

OPEC did not say which of its members would supply the additional crude, which should start to flow into the market in July. Countries with a lack of spare capacity, including Iran, Iraq and Venezuela, are resistant.

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The cartel has overcome opposition from Iran and will raise output by one million barrels per day. "A host of geopolitical events around the world could really stoke prices higher".

A production increase would help undo a 1.2 million barrel cut OPEC agreed on in late 2016 that has since helped push up the price of oil by nearly 50 percent.

Falih said the oil market had now rebalanced and his aim was to prevent a shortage of crude in future that could squeeze the market.

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

However, questions remain over Venezuela, Libya and Angola, whose declines can not be reversed at short notice.

Zanganeh was due to attend a ministerial committee on Thursday.

Saudi Arabia and some other Persian Gulf producers have supported the United States in imposing sanctions on Iran.

"Both Saudi and Iran can show that they won", an OPEC delegate said.

"Despite the rising political tensions, as well as the tensions on the global trade side, we will be able to navigate this stormy weather", he told reporters.

Khalid Al-Falih said he was hopeful an agreement would be reached on Friday, minutes after meeting Iran, which has been the key holdout to a rise in output. He said OPEC could meet again in September to adjust the deal. The next formal OPEC meeting was set for December 3.

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