Asia

Asia

Iran rules out OPEC deal as Russia, Saudi push for oil output hike

19 June 2018 21:50 (UTC +04:00)

Iran said on Tuesday OPEC was unlikely to reach a deal on oil output this week, setting the stage for a clash with Saudi Arabia and Russia, which are pushing to raise production steeply from July to meet growing global demand, APA reports quoting Reuters.

The Organization of the Petroleum Exporting Countries meets on Friday to set output policy amid calls from U.S. President Donald Trump and China to cool down oil prices and support the global economy by producing more crude.

OPEC’s de facto leader, Saudi Arabia, and non-member Russia have proposed gradually relaxing production cuts - in place since the start of 2017 - while OPEC members Iran, Iraq, Venezuela and Algeria have opposed such a move.

“I don’t believe at this meeting we can reach agreement. OPEC is not the organization to receive instruction from President Trump ... OPEC is not part of the Department of Energy of the United States,” Iran’s oil minister Bijan Zanganeh told reporters after arriving in Vienna, where OPEC is headquartered.

Zanganeh said he would leave Vienna on Friday before OPEC holds talks with non-OPEC producers the next day and added a recent rise in oil prices was mainly the fault of Washington, which imposed new sanctions on OPEC members Iran and Venezuela.

Trump has called on OPEC to raise output, and Saudi Arabia and Russia said in recent weeks the world needed more oil.

“Oil demand usually grows at the steepest pace in the third quarter ... We could face a deficit if we don’t take measures,” Russian Energy Minister Alexander Novak said on Tuesday. “In our view, this could lead to market overheating.”

Novak said Russia wanted OPEC and non-OPEC to raise output by 1.5 million barrels per day (bpd), effectively wiping out existing production cuts of 1.8 million bpd that have helped rebalance the market in the past 18 months and lifted oil prices LCOc1 to $75 per barrel from as low as $27 in 2016.

In addition to Iran, OPEC members Iraq, Venezuela and Algeria said they opposed a production increase despite supply outages in countries such as Libya and Venezuela.

Demand growth has surprised market watchers on the upside in the past two years, with annual increases exceeding 1.5 percent. Global oil consumption is expected to hit 100 million bpd next year.