Oil falls as OPEC nears deal to raise production

High oil prices hurting fiscal balance, says Pradhan

OPEC members have agreed on a combined increase in crude oil output of one million barrels per day, the oil minister of the cartel's kingpin Saudi Arabia said Friday.

OPEC is an independent organization, not an organization to receive instruction from President Trump.

If the existing deal is retained and Saudi Arabia felt there was a need to add more oil, Riyadh could still increase production unilaterally, as it did after a meeting in June 2011 ended with no decision.

Two OPEC sources told Reuters the group agreed that OPEC and its allies led by Russian Federation should increase production by about 1 million barrels per day (bpd), or 1 percent of global supply.

Mr. Pradhan went on to say that the prices of oil and gas had become subject to the "vagaries of geopolitics" and urged the OPEC countries to commit towards ensuring more sustainable prices. That arrangement has cleared a global glut of crude oil that sent oil prices spiraling from more than $100 a barrel in 2014 to less than $30 a barrel in 2016.

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The president of the United States doesn't have any problem with increased oil prices since this leads to raising Shale productions, said the minister, adding, "however in public, he shows opposition and blames the OPEC while these conditions are not created by OPEC but by the USA administration".

The actual output increases set a bullish tone, as they came in below some of the highest figures that had been discussed prior to the meeting.

That means the country has little to gain from a deal to raise OPEC output, unlike top oil exporter Saudi Arabia.

As tensions mounted, the Iranian and Saudi ministers huddled for bilateral talks on Friday morning, holding up the start of the closely watched OPEC meeting.

Iran, OPEC's third-largest producer, had demanded OPEC reject calls from Trump for an increase in oil supply, arguing that he had contributed to a recent rise in prices by imposing sanctions on Iran and fellow member Venezuela.

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Ecuador said OPEC and its allies could agree to a compromise increase in output of around 0.5-0.6 million bpd.

Questions remain, however, over the ability of some OPEC nations - Iran and Venezuela in particular - to increase production as they struggle with domestic turmoil and sanctions.

An increase in Opec production will be particularly helpful for the VLCC market, which is on track for the worst year in history due to severe vessel over-supply, according to Amit Mehrotra of Deutsche Bank.

Iraq's oil minister, Jabbar Ali Hussein Al-Luiebi, sounded more optimistic about a deal, saying "we are after the stabilization of the market". Iran is usually not part of the committee, which includes Russia, Saudi Arabia, the UAE, Oman, Kuwait, Algeria and Venezuela.

Al Mazrouei said that OPEC and its allies would now work to boost production by up to 1 million barrels a day.

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There is concern that a shortage and rising prices could cripple the global economy.

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