Opec Agrees to 1mn b/d Hike in Output

Oil cartel Opec has agreed to increase total output with non-cartel allies, headed by Russia, by 1mn b/d gradually by the end of year, it said June 22. The growth will start on July 1.

The United Arab Emirate energy minister Suhail Mohamed Al Mazrouei said that would meet global demand as it ramped up. Iran, Iraq and Venezuela had at first opposed the rise, but Al Mazrouei said that the Russian and Saudi Arabian energy ministers had won them round.

Saudi oil minister Khalid Al Falih however told reporters that the increase in reality would be 600,000 b/d: reaching 1mn b/d growth in a short time is very challenging even for a country such as his, with 2mn b/d spare capacity.

Over 2o Opec and non-Opec producers agreed in 2016 to cut output by 1.8mn b/d from January 2017, although in reality, the cut was actually 2.8mn b/d in recent months owing to plunging Venezuelan production and declines in Angola and Libya.

US, India and China have repeatedly called on Opec to raise production by 1.5mn b/d, but Al Mazrouei said that Opec was listening to sellers as well as buyers. The additional output still leaves the 24 nations down some 1.8mn b/d relative to 2016.

According to Opec’s statistics, Venezuela’s production has declined 45% since the implementation of oil cut deal in January 2017, falling below 1.4mn b/d in May.

The International Energy Agency (IEA) also predicted last week that Iran’s production was expected to decrease by 900,000 b/d by the end of 2019 with the restart of US sanctions. Venezuela’s output also would decrease by 550,000 b/d by that time.