Going against Iran: Russia and Saudi Arabia push for oil output jump

Russia and Saudi Arabia are pushing OPEC and its allies to raise oil output steeply from July to meet growing demand and cover supply outages in Venezuela and Libya despite opposition from several members of the producer group including Iran.

“Oil demand usually grows at the steepest pace in the third quarter ... We could face a deficit if we don’t take measures,” Russian Energy Minister Alexander Novak told reporters. “In our view, this could lead to market overheating.”

Novak said Russia wanted Opec and non-Opec to raise output by 1.5 million barrels per day (bpd), effectively wiping out existing production cuts of 1.8 million bpd that have helped rebalance the market in the past 18 months and lifted oil prices LCOc1 to $75 per barrel from as low as $27 in 2016.

The Organization of the Petroleum Exporting Countries meets on Friday to decide 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.

Opec’s de facto leader, Saudi Arabia, and non-member Russia have proposed gradually relaxing production cuts — in place since the start of 2017 — while Opec members Iran, Iraq, Venezuela and Algeria have opposed such a move.

Opec sources said a technical panel — the organization’s economic commission — met on Monday to review the market outlook and forecast strong global demand for oil during the rest of 2018.

Iran slams Trump

Iran’s oil minister said on Tuesday that US President Donald Trump sought high oil prices to support shale production in the United States, despite his public attack on OPEC over the high price of oil. “We believe Mr Trump prefers high oil prices to support shale production in America, but he attacks OPEC, especially after US withdrawal from the JCPOA (Iran’s nuclear deal), to avoid public pressures for increasing the prices of oil,” said Bijan Zanganeh.