OPEC reaches deal to hike output - oil spikes nearly $2

OPEC reaches deal to hike output - oil spikes nearly $2

"If China's import demand dries up, more than 300,000 barrels per day of US crude will have to find a new destination", energy consultancy FGE said, adding that "this will certainly depress US Gulf Coast prices".

Falih, in a nod to the problems with faltering production in Venezuela, Iran, and Libya, acknowledged that "not every country" will be able to join the production increase.

USA benchmark oil prices were slightly lower Thursday while oil prices in Europe and Asia were down sharply, as investors expect a likely decision Friday by worldwide producers to pump more oil will impact overseas markets more than US markets.

Bloomberg reports that OPEC, which is meeting Friday and Saturday in Vienna, said the cartel will gradually raise output beginning in July by about 600,000 barrels per day.

Fawibe said: "If OPEC increases its production by 1.5million barrels per day, there will be a slump in the price, especially now that we are going to winter."He urged the federal government to proactively address the situation in the oil-producing region to enable the country to boost production, which stood around 2.25 million b/d earlier this year".

OPEC has reached an agreement in principle to boost oil production, achieving a last-minute compromise that overcame Iran's threats to veto any supply hike.

Also supporting prices was a drop in Libyan supplies due to the collapse of an estimated 400,000-barrel storage tank.

Iran faces constraints on its oil exports after Trump reimposed sanctions on May 8.

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OPEC, together with other key producers including Russian Federation, started withholding output in 2017 to prop up prices, but a tightening market has led to calls by consumers for more supplies.

"Our customers have spoken loudly and we must listen to them", Falih said. Brent crude, the global oil benchmark, was down 1.6% on the day, at $73.54 a barrel, on London's Intercontinental Exchange.

OPEC and its allies have since previous year been participating in a pact to cut output by 1.8 million bpd.

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. Its Minister of State for Petroleum Resources, Ibe Kachikwu, says several options remain on the table.

The 24 nations in the pact, known as OPEC+, are now keeping more than two million bpd off the market.

"Allocating to Saudi Arabia part of the quota of countries that cannot increase output could be a technical solution, but may not be a political one", Al-Falih said.

OPEC is an intergovernmental organisation with an objective "to coordinate and unify the petroleum policies of its member countries and ensure stabilization of oil markets".

Asked whether he thought the 14 OPEC ministers gathering in Vienna would reach a unanimous agreement on whether and how to amend the landmark deal, Iraqi Oil Minister Jabbar al-Luaibi replied: "No".

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