Saudi Sides with Oil Consumers as OPEC Nears Pivotal Talks

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OPEC Works Toward Deal as Saudis Propose Plan for Higher Output - Article

The Organization of the Petroleum Exporting Countries is gathering in Vienna amid calls from the United States, China and India to cool down the price of crude and prevent an oil deficit that would hurt the global economy.

Questions remain, however, over the ability of some OPEC nations - Iran and Venezuela in particular - to increase production as they struggle with domestic turmoil and sanctions. In reality, because many countries that have cut the deepest can't increase production, that would probably translate to just 600,000 barrels a day of crude flowing back on to the market.

Iran had been expected to oppose any rise in crude output, but it has now signalled it may support a small increase.

Saudi Arabia claims that production restraints and geopolitical factors have actually seen output fall by far more, to around 2.8 million bpd.

Saudi Energy Minister Khalid al-Falih had earlier signalled to understand for Iran's position, acknowledging that a big production hike might be "politically unacceptable" to some OPEC countries. The institution agreed production caps in November 2016 targeting 32.5m barrels per day following a crash in global oil prices.

Tensions spiked last night when Iranian Oil Minister Bijan Zangeneh stormed out of the Joint Monitoring Committee Meeting and told journalists that it was not a good meeting and a deal was "unlikely". He said the exact mechanics of any increase would be decided among all Opec members on Friday.

OPEC operates on the principle of consensus, and Iran has already signalled it could veto attempts by other cartel members to offset its expected production losses as a result of the upcoming United States sanctions.

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Spearheaded by Crown Prince Mohammed bin Salman, the shift aims to attract more foreign investment and expand the private sector. Meanwhile, Argentina has also been upgraded to emerging market status, having been downgraded to frontier status in 2009.

Taking a somewhat different stance, Russian Energy Minister Alexander Novak said Saturday's endorsement to increase oil production was based on "fundamental principles, on research done by our teams, by teams of our friends and colleagues, the OPEC secretariat".

Benchmark Brent crude jumped $2.19 a barrel, or nearly 3 percent, to a high of $75.24 before slipping to around $75 by 1305 GMT.

That would effectively mean a boost from other oil producing nations such as Saudi Arabia, that has voluntarily cut more deeply than planned.

Even though Saudi Arabia's headline figure calls for a 1 Mbd increase in crude supply to be phased in throughout the second half of the year, the actual physical barrels being added will amount to less.

Iraq's energy minister said it was clear that Opec and its allies would change course after 18 months of production curbs, in an effort to rebalance crude supply and demand.

Observers believe a face-saving deal could be brokered if members simply stopped over-complying with the current pact, and agreed to stick to the original reduction quotas - which would bring several hundred thousand more barrels to the market each day.

Zanganeh told CNN on Wednesday that if OPEC returned to regular compliance, the real supply increase from the group would constitute only around 460,000 bpd. He said OPEC could meet again in September to adjust the deal.

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