U.S. Oil Prices Slip a Bit Before OPEC Meeting

Buhari-oil

Buhari-oil

The output gain is nominal.

At stake is the fate of an 18-month-old supply-cut deal between members of the Organization of the Petroleum Exporting Countries and allied countries that has cleared a global oil glut and lifted crude prices.

OPEC agreed on Friday on a modest increase in oil production from July after its leader Saudi Arabia persuaded arch-rival Iran to cooperate amid calls from major consumers to help reduce the price of crude and avoid a supply shortage.

Fawibe said: "If OPEC increases its production by 1.5million barrels per day, there will be a slump in the price, especially now that we are going to winter."He urged the federal government to proactively address the situation in the oil-producing region to enable the country to boost production, which stood around 2.25 million b/d earlier this year".

The only route to a production boost that Iran has publicly suggested - allowing the handful of countries that have voluntarily cut deeper than necessary to restore some output - would deliver far less extra oil to the market than the Saudi proposal.

Iran's oil minister, Bijan Namdar Zanganeh, questioned this week whether OPEC is united enough to reach any agreement, and said Trump had politicized the debate over oil prices.

The oil market would normally hear a decision, and typically react, on the same day as the meeting of OPEC members, which is set for this Friday, "but this time could be different", said Phil Flynn, senior market analyst at Price Futures Group.

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". "Nigeria under this scenario must build capacity to participate easily when OPEC expands its production", he said.

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Regional rival Iran however is fiercely opposed to unwinding the agreed production curbs, as its oil industry is bracing for fresh sanctions following US President Donald Trump's decision to quit the worldwide nuclear pact.

Iran's Zanganeh has accused Trump of trying to politicise OPEC and said it was U.S. sanctions on Iran and Venezuela that had helped push up prices.

Asked whether he thought the 14 OPEC ministers gathering in Vienna would reach a unanimous agreement on whether and how to amend the landmark deal, Iraqi Oil Minister Jabbar al-Luaibi replied: "No".

Other OPEC-members, including Iran, are against such a move, fearing a sharp slump in prices.

The cartel would be the biggest beneficiary of possible Chinese tariffs on United States oil imports, as these could help it regain market share, OPEC sources and industry officials tell Reuters.

The convoluted plan shows the difficulty Saudi Arabia has in bridging the gap between Russian Federation, which has pushed for a larger increase, and Iran.

They nevertheless tried to bring Iran on board for a deal, with ministers from the UAE, Kuwait and Oman meeting Zanganeh on Wednesday. The new deal would effectively roll back the deeper-than-intended cuts from nations such as Venezuela, returning the curbs back to the level originally agreed in 2016, the delegate said.

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