INSUBCONTINENT EXCLUSIVE:
Logo of Organization of the Petroleoum Exporting Countries is seen at OPEC's headquarters in Vienna.
VIENNA: 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
Two OPEC sources said the group agreed that OPEC and its allies led by Russia should increase production by about 1 million barrels per day
(bpd), or 1 per cent of global supply.The real increase will be smaller because several countries that recently underproduced oil will
struggle to return to full quotas while other producers will not be allowed to fill the gap, OPEC sources have said.The United States, China
and India had urged OPEC to release more supply to prevent an oil deficit that would hurt the global economy.Saudi Arabia and Russia said
they were happy to pump more but Iran had criticised the idea as it faces export-crippling US sanctions.Iran, OPEC's third-largest producer,
had demanded OPEC reject calls from US President Donald Trump for an increase in oil supply, arguing that Trump had contributed to a recent
rise in prices by imposing sanctions on Iran and Venezuela.Trump slapped fresh sanctions on Tehran in May and market watchers expect Iran's
output to drop by a third by the end of 2018
That means the country has little to gain from a deal to raise OPEC output, unlike top oil exporter Saudi Arabia.However, Saudi Energy
Minister Khalid al-Falih appears to have convinced his Iranian peer Bijan Zanganeh to support the increase just hours before Friday's OPEC
meeting.OPEC and its allies have since last year been participating in a pact to cut output by 1.8 million bpd
The measure has helped rebalance the market in the past 18 months and lifted oil to around $75 per barrel from as low as $27 in 2016.But
unexpected outages in Venezuela, Libya and Angola have effectively brought supply cuts to around 2.8 million bpd in recent months.Brent oil
prices were up 1.9 per cent on Friday as the output boost had been largely priced in and was seen as modest."It will be enough for now but
not enough for the fourth quarter to address a decline in Iranian and Venezuelan exports," said Gary Ross, head of global oil analytics at
SP Global."There isn't a lot of spare capacity in the world
If we lose a million bpd of output from Venezuela and Iran in the fourth quarter, where will all these barrels come from We are in for
higher prices for longer," he said.The OPEC meeting began around 1000 GMT and was continuing after two and a half hours.(: OPEC Meet -
Dharmendra Pradhan Calls For Sustainable Oil Prices)MARKET SQUEEZEFalih has warned the world could face a supply deficit of up to 1.8
million bpd in the second half of 2018 and that OPEC's responsibility was to address consumers' worries."We want to prevent the shortage and
the squeeze that we saw in 2007-2008," Falih said, referring to a time when oil rallied close to $150 per barrel.OPEC's deal to release more
supply centres on the idea of returning to 100 per cent compliance with existing, agreed cuts
Current compliance is around 40-50 per cent above target because of production outages in Venezuela, Libya and Angola.Zanganeh has said that
if OPEC returned to regular compliance, the group would raise output by around 460,000 bpd
Iran has objected to having members with additional capacity such as Saudi Arabia fill Venezuelan output gaps.(: Arun Jaitley Hints At No
Reduction In Oil Excise Duty)Falih also said the real increase for OPEC and non-OPEC would be smaller than the nominal gain of 1 million bpd
He said OPEC could meet again in September to adjust the deal.OPEC sources also said Iran had demanded that US sanctions be mentioned in the
group's post-meeting communique.The United States, which rivals Russia and Saudi Arabia for the position of world No.1 oil producer, is not
TheIndianSubcontinent staff and is published from a syndicated feed.)
