Iran says OPEC, allies to increase oil output by 500,000 bpd

Iran says OPEC, allies to increase oil output by 500,000 bpd

Iran says OPEC, allies to increase oil output by 500,000 bpd

The OPEC strategy now has stockpiles nearing the five-year average oil storage levels of the Organisation for Economic Co-operation and Development (OECD) countries. In reality, ministers said several countries are unable to pump more so the real output boost would have been smaller - ranging from Iran's 500,000 barrel-a-day estimate up to Iraq's prediction for as much as 800,000.

Al Jazeera's Paul Brennan explains why.

And despite the push for wider production growth of 1 million barrels per day (bpd), actual output increases of around 600,000bpd are being forecasted due to the fact other OPEC member states can not grow their supplies.

OPEC's decision last week to increase production modestly is seen as an attempt to keep prices elevated without creating a spike. "We believe they are considering it", Khalid Al-Falih said at a press conference. "I can assure that the entire membership of OPEC would welcome Russian Federation". That means the country has little to gain from a deal to raise OPEC output, unlike top oil exporter Saudi.

World oil prices, which had already risen earlier on Friday, continued to rise after the Opec decision ws confirmed, commodities traders reported.

It is unclear how the development will affect prices and for Ghana, an eventual reduction will mean that prices of fuel products are likely to be reduced.

Saudi Arabia's Oil Minister Khalid al-Falih talks to journalists at the beginning of an OPEC meeting in Vienna, Austria, June 22, 2018.

By not setting individual targets, the OPEC deal appeared to give Saudi Arabia the leeway to produce more than its previous OPEC quota and fill the gap left by those such as Venezuela who can not pump enough to meet their official allocation.

"As a group we can meet the 100 percent compliance".

OPEC's deal to release more supply centres on returning to 100 percent compliance with existing, agreed cuts.

United States drillers cut the number of rigs drilling for oil by one to 862, the first cut in 12 weeks, according to a weekly report from GE's Baker Hughes division.

By declining to announce a concrete figure and agreeing to start pumping more, to the extent, they are no longer overshooting the target set in November 2016, Opec somewhat confounded the markets.

As a result, oil supplies fell deeper than expected, and oil prices rose more than expected. Oil prices LCOc1 rose by $1.85 to $74.90 a barrel.

Benchmark U.S. 10-year yields were up on Friday, but have declined on a weekly basis for two straight weeks.

"There was a lot of anticipation in the market that there was going to be a lot of new oil coming to market, and that isn't going to happen, at least for now", said John Kilduff, a partner at Again Capital.

Oil prices have been on a roller-coaster ride over the last few years, with the worldwide marker, Brent, trading above $100 a barrel for several years until 2014, dropping to nearly $26 in 2016 and then recovering to over $80 last month.

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