Saudis Pledge Decisive Oil Supply Boost to Comfort Consumers

Support for increase which had been proposed by Saudi Arabia against objections from Iran was unanimous

Support for increase which had been proposed by Saudi Arabia against objections from Iran was unanimous

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

OPEC's decision to maintain 100 per cent conformity, as compared to 152 per cent observed in May, comes as a relief for India which had been raising concerns at domestic and worldwide forum over increased market volatility and high crude prices.

OPEC sources also said Iran had demanded that USA sanctions be mentioned in the group's post-meeting communiqué.

Iran doesn't believe its customers will get waivers from the USA government that would allow them to continue crude purchases, Oil Minister Bijan Namdar Zanganeh said in a Bloomberg television interview on Friday.

The performance of the United Arab Emirates' oil minister and OPEC President Suhail Mazrouei was a master class in how to avoid a question.

Meanwhile Riyadh, which cheered Washington's exit from the Iranian nuclear deal, is under pressure from its U.S. ally to open the spigots as Trump hopes for lower pump prices ahead of November's mid-term elections.

Saudi Arabia said the move would translate into a nominal output rise of around 1 million barrels per day (bpd), or 1 percent of global supply. In the case of Saudi, supporting prices helps fund its economic diversification and maximize the value of the assets it is selling while higher production prevents high prices that would hurt consuming nations that either provide it with security or will be important in its economic transition (US, China, India). By the end of the year we could be looking at the transfer of as much as 1.5 million barrels a day of production from American foes Venezuela and Iran, with most going to USA ally Saudi Arabia. "They can not go and say Venezuela has 500,000bpd on the table and there is no cat to eat this meat, I'm the cat and I will jump on it", Kazempour said.

Ultimately, Saudi Arabia persuaded Iran to cooperate with the plan to cut output, following calls from major consumers to curb rising fuel costs. "Need to keep prices down!"

Even if OPEC increases its supply by 1m barrels per day, note that actual physical volumes may only increase by 300k-500k barrels per day.

Some traders were far from confident that such an agreement will meet the multiple challenges OPEC faces.

Saudi Aramco, the nation's oil company, has been ramping up production to increase exports from ports in July.

But the joint communique did not spell out how the additional barrels would be divvied up, a key issue given Iran's insistence that cartel members should not be allowed to offset involuntary production losses in other member countries.

Crude prices surged on Friday following the vaguely worded OPEC agreement. I think that the OPEC decision is acceptable and reasonable.

However, OPEC and its allies, including Russian Federation, are now engaging in another round of talks to coordinate a modest increase in production. Alternatively, it may bring OPEC closer to the standard 100 percent compliance levels come 2019, should opposing member states opt out of the crude booster plan.

"With the looming threat of an Iran walkout, the best you could get was deliberate ambiguity", said Helima Croft, global head of commodity strategy at RBC Capital Markets.

Uncertainty over a deal eased markedly when Saudi Arabia's Energy Minister, Khalid Al-Falih assured the world that OPEC would listen to all the views of its member countries during its Thursday seminar.

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