Opec to open oil taps

Andrew Cummings
June 23, 2018

Oil prices rose following the news, with Brent crude trading at $74.69 per barrel (+$1.65), while the US West Texas Intermediate gained nearly $2, trading at $67.53. "Need to keep prices down!"

OPEC meets Russian Federation and other allies on Saturday to clinch a new deal raising oil output, a day after agreeing a production hike within the group itself but confusing the market as to how much more oil it will pump.

OPEC's deal to release more supply centers on the idea of returning to 100 percent compliance with existing, agreed cuts.

Senate Democrats have also called for OPEC to increase production, as well as blaming Trump's policies and his decision to ditch the Iran nuclear agreement for high prices. The minister said the difference between that amounts to "a little bit less than 1 million barrels".

"Each country can only pro-rata increase their production and the majority of them can't increase their production at all", Wright said during an interview on "Countdown to the Closing Bell".

The Dow snapped an eight-session losing streak on Friday (Jun 23) with petroleum giants Exxon Mobil and Chevron scoring strong gains after OPEC agreed to only a modest production increase.

Some analysts believe that Saudi Arabia needs a Brent price closer to $90 a barrel to cover its domestic spending but is feeling pressure from the United States to head off rising prices by boosting output.

By not setting individual targets, the OPEC deal appeared to give Saudi Arabia the leeway to produce more than its previous OPEC quota and fill the gap left by those such as Venezuela who can not pump enough to meet their official allocation. Venezuela's production has dropped amid domestic political instability.

Currently, the crude oil that Iraq is sending to Iran is done in payment for electricity from Iran that Iraq has received, instead of on a crude-oil-swap basis, Iraq's al-Luiebi said on the sidelines of the OPEC meeting in Vienna today.

The group planned to cut output by two percent, about 18 million barrels a day.

Although higher prices are better for the oil industry, Wright says there must be a balance to prevent a dramatic spike in oil prices.

Other reports by iNewsToday