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Home / Business / OPEC set for the oil-wound extension if Iran approves the covenant Av Reuters

OPEC set for the oil-wound extension if Iran approves the covenant Av Reuters



© Reuters. FILE PHOTO: The logo of the organization of the petroleum exporting countries (OPEC) is seen in the headquarters in Vienna

By Rania El Gamal and Ahmad Ghaddar

VIENNA (Reuters) – OPEC and its allies appear to expand oil supplies cut next week in each fall to the end of 2019 when Iraq came to top producers Saudi Arabia and Russia on Sunday, and approved a policy of achieving the price of crude oil among a weakening global economy.

Iran is the only major OPEC nation yet to have publicly spoken about a need to expand production cuts. Tehran has previously protested against the politics of sheet-rival Saudi Arabia, says Riyadh was too close to Washington.

The United States is not a member of OPEC, nor does it participate in a Pact for Supply. Washington has demanded that Riyadh pump more oil to compensate for lower exports from Iran after striking new sanctions against Tehran over its nuclear program.

OPEC and its allies led by Russia have reduced oil production since 201

7 to prevent prices slipping into heavy US sliding production, which has become the world's leading producer this year over Russia and Saudi Arabia.

Fears of weaker global demand as a result of a trade battle between the United States and China have added to the challenges facing the 14-nation organization of the petroleum exporting countries in recent months.

Russian President Vladimir Putin said on Saturday that he had agreed with Saudi Arabia to expand existing production cuts of 1.2 million barrels per day, or 1.2% of global demand, by six to nine months – to December 2019 or March 2020. [19659004] Saudi Energy Minister Khalid al-Falih said the deal would probably be extended by nine months, and no deeper reductions were needed.

"There is a transition and that happens," Falih, whose country is the de facto leader of OPEC, told reporters.

Warren Patterson, head of trading strategy at Dutch bank ING, said OPEC had more to lose by not extending the deal.

"It comes down greatly to the oil price in the financial price – Saudis has a breakeven price of around $ 85 a barrel, and then they will be worried about potentially an increasing gap between this level and where the market is trading," he says. 19659004] Benchmark has climbed more than 25% since the beginning of 2019 to $ 65 a barrel, but prices could cease as a result of the global economy pushing demand and US oil flooding the market, finding a Reuters survey by analysts found. 19659014] WORSENING GEOPOLITICAL RISK

Output cut pact expires on Sunday OPEC meetings in Vienna on Monday followed by talks with Russia and other allies, a group known as OPEC +, on Tuesday.

Iraqi oil minister Thamer Ghadhban said on Sunday that he expected to extend the agreement by six to nine months. [19659004] "Iraq is positive, handles the realities of the oil market challenges and supports everything (efforts) to balance oil supplies. demand and demand, "said Ghadhban.

Iraq has taken over Iran as OPEC's second largest oil producer and exports have increased due to investments from Western majors.

However, Iran's exports have dropped to 0.3 million barrels a day in June from as much as 2.5 million bpd in April 2018 due to Washington's new sanctions. [19659004] The sanctions put Iran under unmatched pressure. Even in 2012, when the EU joined the US sanctions against Tehran, its exports were around 1 million bpd. Oil represents the lion's share of Iran's budget revenue. [19659004] Washington has said it will change what it calls a "corrupt" regime in Tehran. Iran has condemned the sanctions as illegal and says that the White House is run by "mentally retarded" people.

Iranian oil minister Bijan Zanganeh has not spoken the last few days about the OPEC meeting. He is due in Vienna on Monday.

"Worsening tensions between the US and Iran add to the potential for oil price volatility that may be difficult for OPEC members to manage," said Ann Louise Hittle, vice president, macro oils at Wood Mackenzie's advisory services.

"Geopolitical risk means that supply developments are tightened, counteracting the moderate decline in oil demand growth so far this year," she added.


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