OPEC to raise oil production from July

An oil pumpjack operates in the drive-thru area of a McDonald's in Bradford Pennsylvania

Iran's oil minister Bijan Zanganeh said on Saturday that OPEC and its allies will increase oil output by close to 500,000 barrels per day after agreeing a new production deal on Friday.

The proposal is the result of a face-saving compromise hammered out after days of diplomacy in Vienna dominated by tensions between Iran and archfoe Saudi Arabia over amending an 18-month-old supply-cut deal that has lifted oil prices to multi-year highs.

By not setting individual targets, the OPEC deal appeared to give Saudi Arabia the leeway to produce more than its previous OPEC quota and fill the gap left by those such as Venezuela who can not pump enough to meet their official allocation.

The contentious meeting took place under the shadow of vituperation from U.S. President Donald Trump, who anxious that high oil and gasoline prices would be politically painful ahead of midterm elections later this year. "I think Saudi [Arabia] wants to prevent that". The increase in production will be borne largely by Saudi and Russian Federation.

"Each country which has produced less (than its allocation) can produce more".

His position appeared unchanged on Friday.

The Organization of the Petroleum Exporting Countries said in a statement that it would raise supply by returning to 100 percent compliance with previously agreed output cuts, but gave no concrete figures.

Since its December 2016 oil production-cut deal came into effect, the Organisation of Petroleum Exporting Countries (OPEC) has seen crude oil prices more than double, following the market rebound from the lows of early 2016. 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.

Saudi energy minister Khalid Al-Falih.

The OPEC ministers at a meeting on Friday made a decision to increase oil production within the OPEC+ deal by 1 mln barrels per day.

"But this does not mean that Venezuela's production should be produced by some other".

Output has also plummeted in Libya, where fighting between rival factions has damaged key oil infrastructure.

Questions remain, however, over the ability of some OPEC nations - Iran and Venezuela in particular - to increase production as they struggle with domestic turmoil and sanctions.

The price for Brent crude oil was up 2.8 percent to $75.11 per barrel as of 9:15 a.m.

OPEC operates on the principle of consensus, and ministers are keen to avoid a damaging rift between key members that could undermine the bloc's credibility. Though, the actual increase is expected to be around 600,000 barrels a day, according to people familiar with.

"At this stage the 1 million is quite rational", he told reporters after arriving in Vienna, where OPEC is headquartered.

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