Published: Fri, June 22, 2018
Markets | By Noel Gibbs

OPEC meeting in Vienna kickstarts today: Here's what you can expect

OPEC meeting in Vienna kickstarts today: Here's what you can expect

OPEC, however, was struggling to agree on raising output, with Saudi Arabia warning of supply shortages and price rallies but Iran holding out against a deal at the group's meeting on Friday.

The Iranian publication Seda quoted anonymous sources as saying Zanganeh told the other producers that the proposed increase would pave the way for cuts in Iranian oil output that are likely to result from a reimposition of US sanctions against Iran in the fall. Saudi Arabia's proposal for 1 million bpd likely would result in an actual increase of 600,000-800,000 bpd as some members like Venezuela are unable to ramp up, sources told CNBC.

Some analysts believe that Saudi Arabia needs a Brent price closer to $90 to cover its domestic spending but is feeling pressure from the United States to head off rising prices by boosting output. The talks, held as the cartel hosted an worldwide energy conference attended by hundreds of officials, executives and investors, will shape oil prices, energy stocks and currencies of petroleum-exporting countries for months to come.

"While we are not in favour of prices as low as $30 per barrel, we also do not support the prevailing high price which dent our fiscal balance and undermine our development process", Mr. Pradhan added. That may seem insignificant in a global supply of 98 million barrels a day, but critically it would reverse reductions that the same countries approved in late 2016, helping push crude higher by more than 50 percent.

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There are other considerations than dollars and rubles.

Saudi Energy Minister Khalid al-Falih also said on Wednesday that the market demanded more oil in the second half of this year and that OPEC was moving toward "a good decision". "The geopolitical factors will play in a lot". Pradhan said India does not support the prevailing high price.

"Yergin said Saudi Arabia and the United Arab Emirates support the current, tougher USA policy toward Iran, Saudi Arabia's rival for influence in the region, and so will want to support Trump's call for lower prices".

Saudi Arabia's energy minister said that after years of production cuts - when oil prices plummeted in 2014 - it's time to turn back on the tap. OPEC, he said, "is not an organization to receive the instruction from President Trump and follow it".

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"We are making good progress", said United Arab Emirates Energy Minister Suhail Al Mazrouei, who also now holds the position of OPEC president.

Hence, oil might rise if OPEC meets market expectation, or the output hike is less than expected.

Iranian OIl Minister Bijan Zanganeh's exit from a meeting in Vienna on June 21 threw into question whether Russian Federation and the OPEC oil cartel will be able to reach agreement on their proposed 1 million-barrel-a-day production increase, the first such rise since the group agreed to freeze production in 2016. He expects $80 crude by year end, $100 by 2020.

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