Economy

Ecuador sees tough OPEC meeting, smaller output boost

Ecuador sees tough OPEC meeting, smaller output boost

"We're hoping to come out of this with a reasonable decision", Saudi Energy Minister Khalid al-Falih told reporters moments before the OPEC meeting opened. He echoed earlier comments from OPEC Secretary-General Mohammad Barkindo.

But Riyadh, which cheered Washington's exit from the nuclear pact, is under pressure from Trump to boost output in order to lower oil prices ahead of November's midterm elections.

Ministers from the Organization of the Petroleum Exporting Countries are meeting Friday in Vienna for what could be a hard gathering.

Ecuador's oil minister said he expects Friday's OPEC meeting to be hard, citing disagreements on a possible increase in crude output and Iran's demand that the gathering discuss USA sanctions.

But in practice it would mean a boost of less than a 10th of that amount, effectively from Saudi Arabia.

The pair is able to increase their production significantly and the countries are understood to be eager to defend their share of the global market against the return of United States shale oil rigs.

Some OPEC members have been opposed to a production increase, and others don't want to go as far as Saudi Arabia.

Mr Trump has also increased pressure on OPEC to raise production ahead of mid-term elections in the U.S. in November.

"Investor sentiments are shifting and they're no longer expecting a 1 million barrel a day rate hike", Benjamin Lu, a commodities analyst at Phillip Securities Singapore, told AFP.

More news: Trump's order to end family separations

The preliminary accord allows for an additional 600,000 barrels a day of oil to flow onto the market, about 0.5 per cent of global supply, said a delegate.

"Yergin said Saudi Arabia and the United Arab Emirates support the current, tougher US policy toward Iran, Saudi Arabia's rival for influence in the region, and so will want to support Trump's call for lower prices". Venezuela's oil industry is collapsing due to years of mismanagement and an economic crisis.

OPEC and its allies have since previous 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 LCOc1 to around $73 per barrel from as low as $27 in 2016. US light crude was up $3.11, or 4.7 percent at $68.65, supported by the OPEC announcement and by an expected drawdown at the USA oil supply hub at Cushing, Oklahoma.

Oil prices rose in early Asian trading on Wednesday, supported by a drop in US commercial crude inventories reported by the American Petroleum Institute (API).

Trump's involvement makes it hard for Tehran to accept a compromise.

Meanwhile Riyadh, which cheered Washington's exit from the Iranian nuclear deal, is under pressure from its USA ally to open the spigots as Trump hopes for lower pump prices ahead of November's mid-term elections.

The 2016 deal was bargained by so-called OPEC+, which includes members of the Organization of the Petroleum Exporting Countries and 11 non-members, including Russian Federation, to stabilize the market and push up dropping prices.

Last month, the Saudi energy minister commented again on the much-hyped IPO, saying that it was "most likely" to take place in 2019, likely confirming that plans for the sale of 5 percent in Aramco had been pushed from this year to next.

"OPEC is listening to consumers", Bob Dudley, the chief executive of BP Plc, said on the sidelines of the OPEC conference in Vienna.


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