OPEC on tightrope as output target talks prompt clash

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Two OPEC sources told Reuters the group agreed that OPEC and its allies led by Russian Federation should increase production by about 1 million barrels per day (bpd), or 1 percent of global supply.

The initial public offering of Saudi oil giant Aramco-which has already been likely pushed to 2019 from the second half of 2018-could be postponed even further, for after 2019, comments by Saudi Energy Minister Khalid al-Falih suggested on Thursday.

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".

"I don't think we can reach agreement" on the proposal, Zanganeh said as he left the meeting. The measure has helped rebalance the market in the past 18 months and lifted oil to around $75 per barrel from as low as $27 in 2016.

The production increase will partly undo a 1.2 million barrel cut OPEC agreed on in late 2016 that has helped push up the price of oil.

Saudi Arabia and Russia's desire to roll back production cuts has encountered fierce opposition from Iran and Venezuela, while U.S. President Donald Trump has lobbed the occasional rhetorical bomb at the cartel on behalf of consumers.

"In the long term, this will have a negative effect on the global economy even if, in the short term, it might be positive for other non-US producers", Rainer Seele, chief executive at Austria's oil company OMV, said in Vienna where OPEC officials and ministers and top oil industry executives attended a seminar this week.

Oil prices rose in early Asian trading on Wednesday, supported by a drop in USA commercial crude inventories reported by the American Petroleum Institute (API).

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Ministers have gathered in the Austrian capital to discuss a supply increase that would be equivalent to about 600,000 barrels a day, or 0.5 per cent of global supply.

"I am sure we will come to consensus, and we will look back at this meeting as being equally important to the one we had in late 2016 when we made a decision to take that first action we took as 24 countries of restricting supply to bring stability back to the market", he added.

Ultimately, Saudi Arabia persuaded Iran to cooperate with the plan to cut output, following calls from major consumers to curb rising fuel costs.

Brent oil prices were up 1.8% on Friday. Other OPEC members like Iran, Iraq and Venezuela have opposed this idea.

Oil prices fell 2% after the Saudi minister spoke, before recovering slightly.

While trade wars may hurt global economy, therefore hurting global oil demand in the long run, in the short term, the victor will be OPEC.

"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.

Observers believe a face-saving deal could be brokered if members simply stopped over-complying with the current pact, and agreed to stick to the original reduction quotas - which would bring several hundred thousand more barrels to the market each day. Iran has objected to having members with additional capacity such as Saudi Arabia fill Venezuelan output gaps.