Saudi Arabia struggles for Gulf oil producers' support

High oil prices hurting fiscal balance, says Pradhan

High oil prices hurting fiscal balance, says Pradhan

Saudi minister said there is broad support for the proposal to raise crude output by one million barrels a day, according to the Wall Street Journal, however, Iran is reportedly playing a hardball.

The president of the United States doesn't have any problem with increased oil prices since this leads to raising Shale productions, said the minister, adding, "however in public, he shows opposition and blames the OPEC while these conditions are not created by OPEC but by the USA administration".

Falih has warned the world could face a supply deficit of up to 1.8 million bpd.in the second half of 2018 and that OPEC's responsibility was to address consumers' worries. Assuming that the main production continues, that will continue to drive inventories down, we think that that would be, you know, probably too short of a supply situation, that we can not allow to happen.

Saudi Arabia's oil minister says officials from major crude-producing nations will discuss a proposal to increase output by about 1 million barrels per day.

Iran ramped up its oil production by 1 million barrels per day after sanctions were lifted in early 2016 under the Obama administration.

Prices of Brent Crude were down to $73.34 on Thursday, after highs earlier this month of around $80, while USA light crude CLc1 dropped $1 to $64.71.

Other Opec-members, including Iran, are against such a move, fearing a sharp slump in prices.

Iraqi Oil Minister Jabar Al Luaibi said on Wednesday he hoped there would be agreement when Opec meets but added: "The oil market has not reached the level of stabilisation".

Russian Federation and Saudi Arabia are expected to increase their production to compensate for the potential decline in oil production after U.S. sanctions on Iran and Venezuela.

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Iran has so far been the main barrier to a new pact, objecting to US calls for increased output.

Saudi Arabia, under pressure from U.S. President Donald Trump, wants to unwind some of the cuts by engineering a "moderate" supply boost in the second half of the year. US light crude was $1.00 lower at $64.71.

Ecuador also expects a deal allowing more oil to flow onto the market, but something smaller than the 1.5 MMbpd Russia has proposed.

Allardyce said "we could see this knocking $5 per barrel off Brent and perhaps squeezing the WTI discount a little".

But the cushion of spare capacity is already low and will shrink further as OPEC boosts its output, leaving the market without much capacity to absorb further disruptions.

While OPEC's largest producer, Saudi Arabia, was open to higher production, Iran has been hesitant because sanctions imposed by U.S. President Donald Trump are making it hard for the country to export its oil.

In another escalation, India on Thursday joined China and the European Union by increasing duties on various commodities imported from the United States.

So an OPEC deal to increase output could also influence the balance of power in the Middle East. "If China's import demand dries up, more than 300,000 bpd of United States crude will have to find a new destination", energy consultancy FGE said.