Oil ministers back output hike despite Irans walkout

Saudi Arabia is ready to add back production it had agreed to curb in 2016, even though it is benefiting hugely from a almost 75% spike in oil prices.

The United States, China and India had urged OPEC to release more supply to prevent an oil deficit that would hurt the global economy.

Major oil producers are set to pump around 1m more barrels a day to help cool crude prices as part of an Opec deal, according to Saudi Arabia's energy minister.

Once known for rampant cheating on agreed oil output targets, Opec has been over-delivering on a pact in place since January 2017, cutting around one and a half times the promised amount.

"Essner is betting that the Vienna meeting will yield an agreement to boost production by 500,000 to 800,000 barrels a day, far below the 1.5 million barrel figure floated recently by Russia's oil minister, Alexander Novak".

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Iran has bulked at the request because it faces sanctions after President Donald Trump ripped up an worldwide nuclear agreement.

Benchmark Brent crude was up $1.05 a barrel at $74.10 by 0925 GMT.

So far there is no indication that Iran and the other members would agree to such a reallocation, although with officials holding extensive talks in the run-up to Friday's Opec meeting, further compromise could be made.

The odds of OPEC reaching an oil-production deal increased as Iran edged away from a threat to veto any agreement that would raise output and Saudi Arabia put forward a plan that would add about 600,000 barrels a day to the global market.

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.

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OPEC and its allies have since past year been participating in a pact to cut output by 1.8 million bpd.

"If the volume of spare capacity goes down then the market gets much more vulnerable to supply shocks", said Essner, the Nasdaq analyst. He said OPEC could meet again in September to adjust the deal.

While Saudi Arabia's cutting by more than required has helped Opec's compliance, involuntary reductions in Venezuela amid economic crisis and in Angola due to natural decline have had a larger impact and can not be reversed at short notice.

"This is not going to be a decision just based on market analysis and supply and demand", said Daniel Yergin, the vice chairman of research firm IHS Markit and author of several books on the energy industry. The proposal has yet to win the backing of all OPEC members, and may also meet resistance from Venezuela, Algeria or Iraq - nations which have limited scope to increase production.

The United States, which rivals Russian Federation and Saudi Arabia for the position of world No.1 oil producer, is not participating in the current supply pact.

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