Opec agrees to raise output by 1 mn barrels per day
23 Jun 2018
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Opec members agreed to a deal on Friday to increase oil supplies by about 1 million barrels of oil per day, equivalent to an increase of 1 per cent of global supplies.
The agreement follows a week of hard bargaining at Opec's headquarters in Vienna, Austria.
Opec started withholding supplies for about 18 months, amid strong demand, due to declining production in Venezuela and Libya, and the risk of lower output from Iran due to US sanctions.
However, Opec began facing pressure from President Donald Trump and large consumers like India to increase output after crude prices soared to multi-year highs.
Last week, India and China, two of the world’s largest importers of oil and the second and third-largest consumers of the fossil fuel, agreed to work on a buyer’s forum to challenge Opec’s ability to manipulate crude prices in a way that plays havoc with economies of oil importing countries. (See: India, China plan oil buyers' block to counter Opec)
The two countries together accounted for 17 per cent of world oil consumption last year.
Opec's decision to raise out put on Friday follows Saudi Arabia getting Iran, Iraq and Venezuela to agree to an increase in production.
The announcement led to a rise in crude prices with Brent crude rising to $75, or approximately 3 per cent.
Reuters reported, citing two Opec sources, that Opec and its allies led by Russia agreed to increase production by about 1 million barrels per day (bpd), or 1% of global supply.
However, analysts expect the actual increase to be between 600,000 to 800,000 bpd because some OPEC members would be unable to sufficiently ramp up crude production.
