Oil price rose sharply after the Organisation of Petroleum Exporting Countries (OPEC) agreed a modest increase in oil production from next July. This was sequel to recent calls from major consumers to pump more oil into the international market to help reduce the price of crude and avoid a supply shortage. Brent crude oil futures rose $1.79, or 2.5 per cent, to $74.84 per barrel. U.S. West Texas Intermediate crude futures were up $2.99, or 4.6 per cent, at $68.53 a barrel.
Although the 24- member organisation at its meeting in Vienna, Austria, approved a one million barrel boost to daily output, the actual increase will be smaller than that because some nations are incapable of pumping more crude, Bloomberg quoted Nigerian Minister of State for Petroleum, Dr. Ibe Kachikwu to have said. OPEC resolved to increase oil production from next month after its leader Saudi Arabia persuaded arch-rival Iran to cooperate, following calls from major consumers to help reduce the price of crude and avoid a supply shortage.
Major oil consumers- – the United States, China and India had urged Vienna-based OPEC to release more supply to prevent an oil deficit that would hurt the global economy, Reuters reported. The organisation said in a statement that it would go back to 100 per cent compliance with previously agreed output cuts but gave no concrete figures. Saudi Arabia said the move would translate into a nominal output rise of around 1 million barrels per day (bpd), or 1 per cent of global supply. Iraq said the real increase would be around 770,000
Russia and other non-members of Organisation of Petroleum Exporting Countries (OPEC) agreed to join OPEC in raising oil production output by one million barrels per day (mb/d) from July 2018. The Minister of Energy and Industry of United Arab Emirates (UAE) Mr Suhail Al Mazrouei, made the decision known at a news conference after the 4th OPEC and non-OPEC Ministerial Meeting in Vienna on Saturday.
The Minister of Energy of the Russian Federation, Mr Alexander Novak, as well as the Secretary-General of OPEC, Mr Muhammad Barkindo were present at the briefing. Al Mazrouei said that OPEC and non-OPEC countries would raise supply by returning to 100 per cent compliance with previously agreed output cuts after months of underproduction. He added that OPEC and non-OPEC countries combined would pump roughly an extra 1 million barrels per day, with OPEC accounting for most of the additional supply, recalling the 171st OPEC Conference Resolution reached on Nov. 30, 2016 for a production adjustment of 1.2 million barrels a day for OPEC Member countries.
He said that was with the understanding reached with key non-OPEC participating countries, including the Russian Federation, to contribute a production adjustment of 0.6 mb/d. He also recalled the Declaration of Cooperation (DOC) reached on Dec. 10, 2016, noting that countries participating in the DOC exceeded the required level of conformity that reached 147 per cent in May 2018. Accordingly, he said, the 4th OPEC and non-OPEC Ministerial Meeting decided that countries would strive to adhere to the overall conformity level and voluntarily adjust to 100 per cent as from July 1, 2018 for the remaining duration of the DOC.
Al Mazrouei said that the Joint Ministerial Monitoring Committe of the groups would ensure that members adhered to the production decisions. The UAE minister explained that the next OPEC and non-OPEC Ministerial Meeting would take place in Vienna, Austria, on Dec. 4, 2018. Meanwhile, the Minister of Energy of the Russian Federation, Mr Alexander Novak, reaffirmed the continued commitment of the participating oil producing countries to a stable market. He said the increase in production was of mutual interest of producing nations, and would ensure sufficient supply to consumers.
