Opec to tackle thorny oil deal with tentative production lift

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Any decision to increase production during Friday's meeting is expected to see crude oil prices fall further.

OPEC agreed on Friday to raise oil production by around 1 million barrels per day from July for the group and its allies, an OPEC source said.

If all Opec members produced as much as they were allowed under the deal, Opec output would in theory rise by about 740,000 barrels per day, based on Reuters estimates of the group's production in May.

President of Nigerian Association for Energy Economics (NAEE), Prof Wumi Iledare urged the federal government to take necessary steps in boosting the country's capacity to produce more.Iledare, who noted Nigeria's current level of production would not favour the country for higher quota, said OPEC understands the oil market dynamics.

Iran's oil minister, Bijan Namdar Zanganeh, questioned this week whether OPEC is united enough to reach any agreement, and said Trump had politicized the debate over oil prices.

Analysts expect the group will consider an increase of somewhere around 1 million barrels a day.

"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.

The production increase will partly undo a 1.2 million barrel cut OPEC agreed on in late 2016 that has helped push up the price of oil.

Reuters reported that the reinstitution of USA sanctions in November could cut Iran's oil output of almost 4 million barrels a day by a third.

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Brent crude dropped 95 cents, or 1.3 percent, to $73.79 a barrel by 11:13 a.m. EDT after earlier hitting a session low of $72.94.

The convoluted plan shows the difficulty Saudi Arabia has in bridging the gap between Russian Federation, which has pushed for a larger increase, and Iran.

The move comes amid soaring crude prices and output disruptions in several member countries, including Venezuela, Iran and Angola.

As of Thursday afternoon, the two sides had not agreed on the size of any increase, said one delegate.

Zanganeh said he thinks $70 per barrel would be a "very good" oil price.

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. OPEC, he said, "is not an organization to receive the instruction from President Trump and follow it".

"In the mid to long term we are concerned about global trade and global economic growth obviously when the major economies clash".

"This shows that China is a significant outlet for USA crude exports and the early indications are that the exports would be much higher in Q2 2018 given the lower WTI-Brent differential which made the arbitrage to Asia look more attractive", Sivanandam noted.

The planned sale of 5 percent of Aramco-in what would likely be the world's largest IPO ever-could bring Saudi Arabia US$100 billion if Saudi officials' valuation of the company at US$2 trillion stands.

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