OPEC strives for new deal as Iran still wary of output hike

High oil prices hurting fiscal balance, says Pradhan

Saudi Arabia insisted Wednesday it would do "whatever is needed" to avoid oil supply shortages, setting the stage for a showdown with archfoe Iran ahead of crunch OPEC talks on easing a production-cut pact.

At the end of a day of diplomatic back-and-forth in Vienna on Wednesday, delegates were increasingly positive that a deal would be reached at Friday's meeting of the Organization of Petroleum Exporting Countries.

One way of "resolving the situation" would be for all participants in the oil-production cuts to stop exceeding their targets, meaning countries that have been making deeper curbs than they pledged would restore output, Iranian Oil Minister Bijan Namdar Zanganeh told reporters in Vienna.

Saudi Oil Minister Khalid al-Falih said an OPEC committee agreed "to recommend releasing the equivalent of 1 million barrels or thereabout to the market".

Mohammed Barkindo, Opec secretary general.

Brent crude, which forms a substantial portion of India's crude oil basket, fell to as low as $72.94 per barrel on the spot markets from an opening to level of $74.46.

Russian Federation and Saudi Arabia are expected to increase their production to compensate for the potential decline in oil production after USA sanctions on Iran and Venezuela.

Because the group had been producing below that level, that means an increase in production of "a little bit less than 1 million barrels", the Emirati minister said.

The pair is able to increase their production significantly and the countries are understood to be eager to defend their share of the global market against the return of USA shale oil rigs.

The move comes amid soaring crude prices and output disruptions in several member countries, including Venezuela, Iran and Angola.

Sources told Reuters on Thursday that Iran wants any increase to be justified on demand conditions and not dictated by outside external pressure, as even some of Saudi Arabia's traditional allies have accused the kingdom of bending too far to appease us wishes.

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Refinery crude runs rose to 17.7 million barrels per day, the highest on record for this time of year, the EIA data showed.

The preliminary accord allows for an additional 600,000 barrels a day of oil to flow onto the market, about 0.5 per cent of global supply, said a delegate.

There's a good reason for the two countries' opposition - neither have the ability to increase their own production. Venezuela's oil industry is collapsing due to years of mismanagement and an economic crisis.

OPEC and its allies exceeded their pledged 1.8 million barrels a day of production cuts by 47 percent last month.

Meanwhile, the oil industry will watch how USA shale firms respond to the OPEC decision Friday.

The price of oil jumped after the announcement, with the global benchmark, Brent, gaining 2.5 percent to $74.84 a barrel in London, and US crude climbing 4.9 percent to $68.72 a barrel in afternoon trading in NY - on track for its biggest one-day rise since OPEC agreed in November 2016 to cut production.

Trump's involvement makes it hard for Tehran to accept a compromise.

But Riyadh, under pressure from Washington to boost output in order to bring down prices, is encountering stiff opposition from Tehran, which is facing renewed sanctions following Washington's exit from the global nuclear agreement.

Mr. Pradhan went on to say that the prices of oil and gas had become subject to the "vagaries of geopolitics" and urged the OPEC countries to commit towards ensuring more sustainable prices. "Stay tuned." A decision to increase output could be taken with Iran refusing to sign up, as has happened before in Opec.

-With assistance from Salma El Wardany, Annmarie Hordern, Manus Cranny, Elena Mazneva, Laura Hurst, Javier Blas, Grant Smith, Francois de Beaupuy and Golnar Motevalli.

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