Iran rebuffs Trump's call for OPEC to increase oil output

Iran rebuffs Trump's call for OPEC to increase oil output

According to Bloomberg, the prospect of binding Russian Federation, the world's largest exporter after Saudi Arabia, more closely to OPEC might help persuade Iran and Venezuela, another skeptic about the need for an increase, to back higher production in the second half of the year.

The move would effectively wipe out existing production cuts of 1.8 million bpd, which have helped rebalance the market in the past 18 months and lifted oil prices to almost $80 per barrel from as low as $27 in 2016.

Both countries would struggle to increase output significantly, as Iran is facing renewed US sanctions that will impact its oil industry and Iraq still has production constraints. Oil is in focus ahead of an OPEC meeting on Friday, and a strengthening U.S. dollar is weighing on gold prices.

Opec members are discussing a compromise agreement that would see an oil production increase of between 300,000 and 600,000 barrels a day over the next few months, according to people briefed on the talks. But oil price should not be out of reach. There is a faction of smaller countries who want to continue with the production cut as they benefit from the rise in oil prices at a time when they are pumping oil at nearly full capacity.

Expressing his optimism over regaining balance to the worldwide oil market, Al Mazrouei said: "Looking ahead, I remain optimistic that we will fulfil our goal of delivering sustainable oil market stability, which is meant to serve the long term interests of producers, consumers and the global economy".

Meanwhile, Hindustan Petroleum Corporation Limited (HPCL) Chairman Mukesh K. Surana also said fuel prices may be lowered post the upcoming OPEC meeting.

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Oil prices fell on Thursday as crude producers appeared to be nearing a deal to increase production at an OPEC meeting in Vienna on Friday, but pared losses after a report of a large stockpile draw at a key storage in the United States. That could keep a cap on prices and limit how much money Opec makes at higher production levels. EIA expects oil demand to grow by 1.4 million barrels/day and non-OPEC supply will grow by 2 million barrels/day.

"This escalation of the trade war is risky for oil prices", said Stephen Innes, head of trading for Asia/Pacific at futures brokerage OANDA in Singapore. U.S. President Donald Trump has continued to criticize OPEC on his Twitter account.

For one, the confrontationist attitude shown by the United States government has rattled world currency markets.

The Organization of the Petroleum Exporting Countries (OPEC) will meet in Vienna next week to discuss potential reduction or revision to the 1.8 million barrels/day production cut put in place in early 2017.

Non-OPEC members including Russia, Oman and Mexico also agreed to cut 558,000 bpd off their production to stabilise the market.

In the meantime, the storage capacity at Ras Lanuf port had been cut by 4,00,000 barrels after a second crude oil tank was set on fire amid fighting between rival factions for control of two key export terminals in Libya. Well, we have to wait until the price reaches the 50 SMA, don't we?

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