OPEC agrees modest hike in oil supply after Iran softens stance

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The kingdom's plan involves a complex calculation based on how much the group has cut production beyond the initial target of 1.8 million barrels a day set in 2016, said delegates, asking not be named discussing private meetings.

However, Saudi Energy Minister Khalid al-Falih appears to have convinced his Iranian peer Bijan Zanganeh to support the increase just hours before Friday's OPEC meeting. "The already fragile world economic growth will be at threat if oil prices persist at these levels".

Falling production in Venezuela and Libya, as well as the risk of lower output from Iran as a result of US sanctions, have all increased market worries of a supply shortage. US light crude was 80 cents higher at $66.34.

Reuters reported that the reinstitution of usa sanctions in November could cut Iran's oil output of almost 4 million barrels a day by a third. The two top crude oil suppliers to China are Russian Federation and Saudi Arabia, with Russian Federation beating the Saudis for the top spot in each of the past 13 months.

They nevertheless tried to bring Iran on board for a deal, with ministers from the UAE, Kuwait and Oman meeting Zanganeh on Wednesday.

In 2000, then-U.S. President Bill Clinton's energy secretary, Bill Richardson, phoned Ali al-Naimi, the Saudi oil minister at the time, during an OPEC meeting to ask for more oil.

After almost two years of relative unity, the talks in Vienna this week have found Opec divided.

The current standoff was partially triggered by the United States, with Trump calling directly on OPEC to raise output.

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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.

"We're not going to allow a shortage to materialize to the point that markets will be squeezed and consumers will be hurt". A big OPEC deal- adding more than 1 million barrels - could cause prices to dip into the $2.60s or $2.70s this summer, he said.

Zanganeh has said that if OPEC returned to regular compliance, the group would raise output by around 460,000 bpd.

Saudi Arabia and some other Persian Gulf producers have supported the United States in imposing sanctions on Iran.

Falih also said the real increase would be smaller than the nominal gain of 1 million bpd., meaning a compromise with Iran remained possible.

Opec used the opening of the meeting to make it clear the group did not want to see prices sliding too much because of a rise in supplies. OPEC, he said, "is not an organization to receive the instruction from President Trump and follow it".

"Yergin said Saudi Arabia and the United Arab Emirates support the current, tougher US policy toward Iran, Saudi Arabia's rival for influence in the region, and so will want to support Trump's call for lower prices".

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