Although higher prices are better for the oil industry, Wright says there must be a balance to prevent a dramatic spike in oil prices. U.S. President Donald Trump has been calling publicly for the cartel to help lower prices.
Saudi Arabia, backed by non-member Russian Federation, has argued that it is time to raise production in order to meet growing demand and appease major consumer countries like the United States, India and China who have complained about a sustained increase in prices since output was cut back from January past year. Crude oil hit $73.98 a barrel on Brent exchange on Friday.
But Nigerian Oil Minister Emmanuel Ibe Kachikwu said the deal is actually to boost output by 700,000 barrels a day in the second half of this year.
Russia's Energy Minister Alexander Novak had said ahead of Saturday's meeting that it was "timely" for OPEC and its 10 partner countries, known as OPEC+, to raise production. "Need to keep prices down!" Iraq said the real increase would be around 770,000 bpd because several countries that had suffered production declines would struggle to reach full quotas.
Non-OPEC countries like Russian Federation had agreed in 2016 to participate in OPEC's effort to raise prices, cutting 600,000 barrels a day of their own production. Russian Federation and other non-OPEC oil producers will now meet OPEC in a bid to secure their participation in the pact.
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Saudi Arabian Oil Minister Khalid al-Falih talks to journalists before the Opec meeting in Vienna on Friday. However, operators in the Permian Basin of Texas face a shortage of pipeline capacity, "trapping a fair amount of oil and limiting the availability of that shale increase", said Jim Rittersbusch, a consultant to oil traders.
Much of the current production shortfall has come from Venezuela, where an economic crisis has savaged petroleum production.
OPEC and partners including Russian Federation and Oman have since past year cut output by 1.8 million bpd. Alongside this, the increase in output will likely be easily absorbed by the market and is not going to tip the oil balance into negative territory, which could allow for oil prices to grind higher.
But unexpected outages in Venezuela, Libya and Angola have effectively brought supply cuts to around 2.8 million bpd in recent months.
"Both Saudi and Iran can show that they won", an OPEC delegate said.