The impact of returning Crude oil flows from the world's two largest oil producers (combined total output of over 21 million barrels per day) may still hold influence over Brent Crude prices in light of recent supply-side tensions and shocks out of Venezuela, Libya, Angola and Nigeria.
As I noted earlier this week, a compromise at this OPEC meeting would require the group to abandon individual output targets and Iran to cede market share to Saudi Arabia.
Al Jazeera's Paul Brennan explains why.
Saudi Arabia said the move would translate into a nominal output rise of around 1 million barrels per day (bpd), or 1 percent of global supply.
Russia's Energy Minister Alexander Novak had said ahead of Saturday's meeting that it was "timely" for OPEC and its 10 partner countries, known as OPEC+, to raise production.
How that translates into effective production increases is uncertain, as some OPEC countries can not easily ramp up production.
Russian Federation and other non-OPEC oil producers will now meet OPEC in a bid to secure their participation in the pact. Iran said the real increase could amount to as little as 500,000 bpd. Alongside this, the increase in output will likely be easily absorbed by the market and is not going to tip the oil balance into negative territory, which could allow for oil prices to grind higher.
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"But this does not mean that Venezuela's production should be produced by some other". Due to the global anticipation of the Cartel's voluntary supply withdraws - aimed at further sustaining the technical price recovery - prices have steadily continued to trend higher since the 2014 Brent Crude oil contract plunged. The group said compliance reached 152 percent in May 2018, which means OPEC was cutting about 600,000 bpd more than it intended.
OPECagreed to increase output by 1mln bpd to reduce "over compliance" with the current output agreement.
U.S. President Donald Trump had been calling publicly for the cartel to help lower prices by producing more.
OPEC and its allies have since past year been participating in a pact to cut output by 1.8 million bpd. The measure had helped rebalance the market in the past 18 months and lifted oil to around $75 per barrel from as low as $27 in 2016.
Ultimately, Saudi Arabia persuaded Iran to cooperate with the plan to cut output, following calls from major consumers to curb rising fuel costs.
He also warned the world could face a supply deficit of 1.8 million bpd in the second half of 2018 and that it was OPEC's responsibility to alleviate consumers' concerns.
Iran's Zanganeh earlier this week accused Trump of trying to politicise OPEC and said it was USA sanctions on Iran and Venezuela that had helped push up prices.