OPEC and allies agree to share oil production increase

Traders work on the floor of the NYSE in New York

Traders work on the floor of the New York Stock Exchange in New York U.S

Venezuela, in the throes of an economic crisis, is also opposed to easing the cartel's output curbs, as are several other countries, including Iraq and Nigeria, who would struggle to immediately increase production.

Saudi Energy Minister Khalid al-Falih said OPEC and non-OPEC combined would pump roughly an extra 1 million barrels per day (bpd) in coming months, equal to 1 percent of global supply.

OPEC energy ministers scrambled to hammer out a compromise on oil output policy Friday as they debated a Saudi proposal to ramp up production that has encountered fierce resistance from sanctions-hit Iran.

"Each country can only pro-rata increase their production and the majority of them can't increase their production at all", Wright said during an interview on "Countdown to the Closing Bell".

"If we allocated the number pro-rata basis among the 24 countries, given the capacity of those countries that can increase, it had been estimated that about 60% will be achieved", Al-Falih said. "More oil on the market means relatively lower prices for consumers". Iran has objected to having members with additional capacity such as Saudi Arabia fill Venezuelan output gaps.

"Some of the countries. are not going to be able to produce, so the others will".

The group gathered in Vienna against a backdrop of calls from the United States, China and India to cool down the price of crude and prevent an oil deficit that would hurt the global economy.

But regional rival Iran has bristled at the thought of lifting the output ceiling at a time when its oil industry is facing renewed sanctions over US President Donald Trump's decision to quit the global nuclear deal with Tehran. The measure has helped rebalance the market in the past 18 months and lifted oil to around $74 per barrel from as low as $27 in 2016.

Russian Energy Minister Alexander Novak said on Saturday he was happy with the decision even though he had previously pushed OPEC and non-OPEC to raise output by as much as 1.5 million bpd. The overall figure for compliance came in at 162 percent for May, up from the recent April highs of 149 percent, due to the unexpected supply disruptions out of Venezuela, Iran, Libya and Nigeria. Both Russia and Saudi Arabia are members, and the committee's increasing importance will help cement their dominance over a coalition that pumps more than half the world's crude.

OPEC's official statement said members agreed to return to 100 percent compliance with the 2016 deal beginning on July 1. This not only adversely impacts one of OPEC's largest member's upstream activities, further weighing output levels lower by 600,000 bpd, but also lead to the retraction of production volumes half amounting to nearly half of OPEC's agreed total reduction of 1.2 mbpd.

Iran's Zanganeh earlier this week accused Trump of trying to politicise OPEC and said it was U.S. sanctions on Iran and Venezuela that had helped push up prices.

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