VIENNA — OPEC members agreed on Friday on a modest increase in oil production from next month after its leader, Saudi Arabia, persuaded arch-rival Iran to cooperate, following calls from major consumers to curb rising fuel costs.
But the agreement failed to announce a clear target for the output increase, leaving traders guessing how much more OPEC actually will pump.
The United States, China and India had urged oil producers to release more supply to prevent an oil deficit that could undermine global economic growth.
The Organization of the Petroleum Exporting Countries said in a statement that it would raise supply by returning to 100 percent compliance with previously agreed output cuts, but gave no concrete figures.
Saudi Arabia said the move would translate into a nominal output rise of around one million barrels per day (bpd), or one percent of global supply. Iraq said the real increase would be around 770,000 bpd because several countries that had suffered production declines would struggle to reach full quotas.
By avoiding setting individual country targets, the deal appears to give Saudi Arabia the leeway to produce more than its official OPEC target and fill the gap left by those such as Venezuela, which cannot pump enough to meet their official allocation.
Iran, OPEC’s third-largest producer, had demanded OPEC reject calls from President Donald 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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Trump slapped fresh sanctions on Tehran in May and market watchers expect Iran’s output to drop by a third by the end of 2018. That means the country has little to gain from a deal to raise OPEC output, unlike top oil exporter Saudi Arabia.
However, Saudi Energy Minister Khalid al-Falih convinced his Iranian peer Bijan Zanganeh to support the increase just hours before Friday’s OPEC meeting.
OPEC and its allies have since last year been participating in a pact to cut output by 1.8 million bpd. The measure had helped rebalance the market in the past 18 months and lifted oil to around $75 per barrel from as low as $27 in 2016.
But unexpected outages in Venezuela, Libya and Angola effectively have brought supply cuts to around 2.8 million bpd in recent months.
The output boost agreed on Friday had been largely priced into the market and was seen as modest.
“It will be enough for now but not enough for the fourth quarter to address a decline in Iranian and Venezuelan exports,” said Gary Ross, head of global oil analytics at S&P Global.
“There isn’t a lot of spare capacity in the world. If we lose a million bpd of output from Venezuela and Iran in the fourth quarter, where will all these barrels come from? We are in for higher prices for longer,” he said.