Opec agrees to increase oil production by a million barrels
The daily increase was announced after ministers from the group met in Vienna.
Countries in the Opec oil cartel have agreed to a new oil output level that effectively increases production by almost a million barrels per day.
The increase was announced as ministers from the group met in Vienna.
The production increase will partly undo a 1.2 million barrel cut Opec agreed in late 2016 that has helped push up the price of oil.
Ahead of Friday’s meeting, Opec’s largest producer, Saudi Arabia, was seen to be open to higher production but Iran had been hesitant.
US President Donald Trump has been calling publicly for the cartel to help lower prices.
Emirati energy minister Suhail al-Mazrouei said the decision was to fully comply with Opec’s self-imposed production limit, and the difference between that and current levels is “a little bit less than one million barrels”.
How that translates into effective production increases is uncertain, as some Opec countries cannot easily ramp up production.
Iran has been hit by US sanctions that hinder its energy exports, and Venezuela’s production has dropped amid domestic political instability.
The price of oil jumped after the announcement, with the international benchmark, Brent, gaining 1.61 dollars to 74.66 dollars a barrel.
Non-Opec countries like Russia had agreed in 2016 to participate in Opec’s effort to raise prices, cutting 600,000 barrels a day of its own production. They will discuss with Opec on Saturday on whether to increase their own production.
The production limits by the Organisation of the Petroleum Exporting Countries and Russia since 2016 have helped increase oil prices, with the benchmark US crude contract hitting its highest level in more than three years in May.
Some analysts note that while Mr Trump has blamed Opec, his policies have also helped increase the cost of oil by, for example, limiting exports from Iran.
Some analysts believe Saudi Arabia needs a Brent price closer to 90 dollars a barrel to cover its domestic spending but is feeling pressure from the US to head off rising prices by boosting output.
Russia may be happy to pump more oil and settle for prices in the 60s, according to Tamar Essner, chief energy analyst for Nasdaq.