OPEC agrees to increase oil output to avoid deficit

High oil prices hurting fiscal balance, says Pradhan

Iran has edged away from a threat to veto any agreement that would raise output, while Saudi Arabia has put forward a plan that would add 600,000 barrels a day - about 0.5 percent of global supply - smaller than the 1.5 million increase Russian Federation proposed.

"The most important thing is the consumers", Saudi Energy Minister Khalid Al-Falih said Thursday.

"We are making good progress", said United Arab Emirates Energy Minister Suhail Al Mazrouei, who also now holds the position of OPEC president.

While India is not in favour of oil prices as low as $30 a barrel, the prevailing price levels are too high and stand to hurt the country's fiscal situation, Petroleum Minister Dharmendra Pradhan said on Wednesday.

Falih said that recent production outages in Venezuela, Libya, and Angola have already reduced global supplies by about 1 million barrels a day.

Trump's involvement in pressing for OPEC to act - which in addition to his tweets include a behind-the-scenes request for a 1 million-barrel-a-day supply hike - could make it hard for Tehran to accept a compromise.

He said Trump had contributed to the rise in prices by imposing sanctions on OPEC members Iran and Venezuela, which will likely lead to lower exports.

The real increase, however, will be around 770,000 bpd, according to Iraq, because several countries that recently suffered production declines will struggle to reach full quotas, while other producers may not be able to fill the gap.

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U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $66.49 a barrel, up 95 cents, or 1.5 percent.

The Organisation of the Petroleum Exporting Countries meets on Friday to decide output policy amid calls from major consumers such as the U.S. and China to cool down oil prices.

"We are going to change this structure (of one million bpd)", he said as the meeting kicked off.

In a night of drama in Vienna, the Joint Ministerial Monitoring Committee, which recommends policy to the group, reached an agreement despite Bijan Zanganeh, the Iranian oil minister, walking out of the meeting and predicting Opec won't reach a final deal when it meets formally on Friday. He said the meeting would tackle over-compliance with oil output cuts and that Iran was "very cooperative".

Some analysts believe that Saudi Arabia needs a Brent price closer to $90 to cover its domestic spending but is feeling pressure from the United States to head off rising prices by boosting output.

"This shows that China is a significant outlet for U.S. crude exports and the early indications are that the exports would be much higher in Q2 2018 given the lower WTI-Brent differential which made the arbitrage to Asia look more attractive", Sivanandam noted. That would effectively mean a modest boost from producers such as Saudi Arabia that have voluntarily cut more deeply than planned.

"We want to prevent the shortage and the squeeze that we saw in 2007-08", Falih said, referring to a time when shortages sent premium-crude-oil prices soaring to an unprecedented $150 per barrel and ushered in a major boom-bust cycle that devastated the oil sector for a decade.

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