OPEC will meet again on Saturday with non-members, including Russia, to ratify Friday's agreement
OPEC has agreed to boost oil production, achieving a last-minute compromise that overcame Iran’s threats to veto any supply hike.
“We have an agreement” to make a 1 million barrel-a-day adjustment on paper to the production cuts implemented by the group in cooperation with allies including Russia, Saudi Energy Minister Khalid Al-Falih told reporters in Vienna.
In reality, the accord adds 600,000 barrels a day of oil to the market, about 0.5 percent of global supply, because several members are unable to raise output, said a delegate.
The new deal would effectively roll back the deeper-than-intended cuts from nations such as Venezuela, returning the curbs to the level originally agreed in 2016, the delegate said.
The accord is a much-needed show of unity from the Organization of Petroleum Exporting Countries and allies including Russia.
An agreement was in doubt after Iranian Oil Minister Bijan Namdar Zanganeh walked out of a meeting on Thursday evening, predicting that OPEC wouldn’t be able to convince him to back an increase.
Iran had bridled at complaints on Twitter by US President Donald Trump that the cartel was artificially inflating oil prices, which touched $80 a barrel last month.
Zanganeh has said the president is to blame for high prices because of his unilateral withdrawal from the international nuclear agreement and the imposition of fresh sanctions that could significantly curb Iran’s crude exports.
OPEC and its allies exceeded their pledged 1.8 million barrels a day of production cuts by 47 percent last month.
Those additional supply losses have been largely unintentional, reflecting the collapse in Venezuela’s oil industry and long-term declines in Mexican output.
Saudi Arabia has enough spare capacity to offset those losses and keep a lid on prices, but Energy Minister Khalid Al-Falih acknowledged on Thursday that such a move isn’t politically palatable for his fellow OPEC members.
The kingdom also wants to preserve the hard-won unity in the group of 24 oil producers that signed up to the original deal.
The talks in the Austrian capital were the latest steps in a process that has whipsawed oil markets for weeks as consumers from the US to India and China expressed anxiety over rising prices as Saudi Arabia and Russia sought a deal that would please all sides.
OPEC will meet again on Saturday with non-members, including Russia, to ratify Friday’s agreement.For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.