OPEC reaches deal to raise oil output

OPEC strikes deal to boost oil production | TheHill

"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.

But the joint communique did not spell out how the additional barrels would be divvied up, a key issue given Iran's insistence that cartel members should not be allowed to offset involuntary production losses in other member countries.

Oil producers' cartel, OPEC (Organization of the Petroleum Exporting Countries), and Russian Federation has made a decision to increase production by 1 million barrel per day (bpd) - or 1 per cent of global supply - striking a deal with Iran who were opposing the hike.

The European Union imposed tariffs on $3.4 billion in USA exports, and President Donald Trump threatened to put a 20 percent tax on cars made in Europe.

Asked to what extent the decision to increase supply had been driven by pressure from Trump, Novak said: "It is obvious that we are not being driven by tweets but base our actions on deep market analysis". OPEC producers are set to discuss boosting production.

For about three weeks ahead of the Opec meeting, prices had retreated from 3-1/2-year highs on fears that larger production increases could lead to oversupply.

Saudi Arabian Oil Minister Khalid al-Falih talks to journalists before the Opec meeting in Vienna on Friday.

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Up to April 2018, while oil prices increased by almost 25% compared to the same period a year ago, investment in oil industry has not picked up in a commensurate manner. "But because we went away from allocation on a pro-rata basis, we will be closer to 1 million than to 600,000 barrels a day".

Falih has warned the world could face a supply deficit of up to 1.8 million bpd in the second half of 2018 and that OPEC's responsibility was to address consumers' worries. 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.

Production levels from participating members put compliance at more than 100 percent, though some of that is attributed to Venezuela.

The performance of the United Arab Emirates' oil minister and OPEC President Suhail Mazrouei was a master class in how to avoid a question.

Zanganeh has said that if OPEC returned to regular compliance, the group would raise output by around 460,000 bpd.

Ultimately, Saudi Arabia persuaded Iran to cooperate with the plan to cut output, following calls from major consumers to curb rising fuel costs.

Much of the shortfall has come from Venezuela, where an economic crisis has savaged petroleum production.

"That is the big news of the day, both the OPEC news and just the reaction of the stocks as well", said Tim Ghriskey, Chief Investment Strategist at Inverness Counsel in New York, New York. The next formal OPEC meeting was set for December 3.

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