Iran, Saudi oil ministers meet to avert showdown

Iran, Saudi oil ministers meet to avert showdown

Iran, Saudi oil ministers meet to avert showdown

The Organization of the Petroleum Exporting Countries meets on Friday to decide on output policy amid calls from major consumers such as the United States and China to cool down oil prices and support the global economy by producing more crude. The proposal has yet to win the backing of all OPEC members, and may meet resistance from more hawkish countries in the group including Venezuela and Algeria as well as Iran.

Saudi Oil Minister Khalid al-Falih said that an OPEC committee ahead of the official meeting had agreed "to recommend releasing the equivalent of 1 million barrels or thereabout to the market".

"We are making good progress", said United Arab Emirates Energy Minister Suhail Al Mazrouei, who also now holds the position of OPEC president.

The move infuriated Iran, and Zanganeh refused to sign up to the meeting's decision to raise output.

Falih said that recent production outages in Venezuela, Libya, and Angola have already reduced global supplies by about 1 million barrels a day.

Falling production in Venezuela and Libya, as well as the risk of lower output from Iran as a result of United States sanctions, have all increased market worries of a supply shortage.

Three Opec members - Iran, Venezuela and Iraq - have been reluctant to consent to a formal increase in Opec's output target, agreed as part of a deal with Russian Federation and other non-member producers and running until the end of 2018.

The Iranian publication Seda quoted anonymous sources as saying Zanganeh told the other producers that the proposed increase would pave the way for cuts in Iranian oil output that are likely to result from a reimposition of USA sanctions against Iran in the fall.

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Oil prices fell after Al-Falih's comments, with benchmark Brent crude losing as much as 2.4 percent to $72.94 a barrel in London.

In an historic agreement in late 2016 the OPEC+ group of 24 nations made a decision to cut 1.8 million barrels of production to revive the oil market from its biggest slump in a generation.

As tensions mounted, the Iranian and Saudi ministers huddled for bilateral talks on Friday morning, holding up the start of the closely watched OPEC meeting. Oil prices stabilized on Wednesday, with the Brent crude unchanged at $75 per barrel. Other OPEC members like Iran, Iraq and Venezuela have opposed this idea.

Zanganeh said he thinks $70 per barrel would be a "very good" oil price.

Mr. Pradhan went on to say that the prices of oil and gas had become subject to the "vagaries of geopolitics" and urged the OPEC countries to commit towards ensuring more sustainable prices.

"I am sure we will come to consensus, and we will look back at this meeting as being equally important to the one we had in late 2016 when we chose to take that first action we took as 24 countries of restricting supply to bring stability back to the market", he added.

The deal looked to be in line with many analysts' forecasts. Iran has objected to having members with additional capacity such as Saudi Arabia fill Venezuelan output gaps.

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