Could China turn to Iran oil? Former Exxon president weighs in

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The Organization of the Petroleum Exporting Countries, or Opec, is gathering in Vienna amid calls from the United States, China and India to cool down the price of crude and prevent an oil deficit that would hurt the global economy.

Russian Federation has proposed Opec and non-Opec 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 to $75 per barrel. A separate meeting of OPEC members and non-members, .

"I'm confident that at the end of the day reason will prevail", Saudi Energy Minister Khalid Al-Falih told reporters in Vienna after a succession of meetings.

Iraqi Oil Minister Jabar Al Luaibi said on Wednesday he hoped there would be agreement when Opec meets but added: "The oil market has not reached the level of stabilisation".

Riyadh has said it is ready "to mitigate the effects of any supply shortages" from USA sanctions on Iran's oil.

Oil prices have spiked by as much as 20% this year, in part because OPEC has produced even less than was foreseen under the 2016 agreement, which was supposed to reduce supply by 1.8 million barrels per day. Trump has been lobbying OPEC to help lower prices.

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.

If this threat turns into reality, USA crude oil-which is now in high demand in Asia due to the wide $9-a-barrel discount to the Brent Crude worldwide benchmark-will become uncompetitive.

But production problems in Venezuela and Libya have seen about 2.8 million barrels removed from daily global supply. Oil prices stabilized on Wednesday, with the Brent crude unchanged at $75 per barrel. "We have a valid deal", Iran's Opec governor Hossein Kazempour Ardebili said, responding to a question whether the agreement would be adjusted on Friday. Other OPEC members like Iran, Iraq and Venezuela have opposed this idea. Zanganeh has said the president is to blame for high prices because of his unilateral withdrawal from the worldwide nuclear agreement.

In the past year, many promised to prioritize spending discipline over production expansion after previously rushing to pump more oil when prices recovered.

He acknowledged that a big production hike might be "politically unacceptable" to some OPEC countries and said it was important to be "sensitive" to those concerns.

"If the volume of spare capacity goes down then the market gets much more vulnerable to supply shocks", said Essner, the Nasdaq analyst.

Saudi Arabia and some other Persian Gulf producers have supported the United States in imposing sanctions on Iran. The International Energy Agency, which represents consuming nations, expects demand to grow more slowly in the second half of this year partly due to rising oil prices - but still 1.35 million barrels a day higher than the same period in 2017.