Saudi Arabia and Russia are discussing raising OPEC and non-OPEC oil production by some 1 million barrels a day, sources said, while OPEC’s chief said a complaint from U.S. President Donald Trump over high prices had triggered the idea of upping output.
Riyadh and Moscow are prepared to ease output cuts to calm consumer worries about supply adequacy, their energy ministers said on Friday, with Saudi Arabia’s Khalid al-Falih adding that any easing would be gradual so as not to shock the market.
Upping production would ease 17 months of strict supply curbs amid concerns that a price rally has gone too far, with oil having hit its highest since late 2014 at $80.50 a barrel this month.
OPEC began a discussion about easing production cuts following a critical tweet from Trump, OPEC’s Secretary-General Mohammad Barkindo said. Trump tweeted last month that OPEC had “artificially” boosted oil prices.
“We pride ourselves as friends of the United States,” Barkindo told a panel with the Saudi and Russian energy ministers in St. Petersburg at Russia’s main economic forum.
The Organization of the Petroleum Exporting Countries and allies led by Russia have agreed to curb output by about 1.8 million barrels per day (bpd) through 2018 to reduce global stocks, but the inventory overhang is now near OPEC’s target.
Sources familiar with the matter said an increase of 1 million bpd would bring compliance with agreed supply curbs down to 100 percent from April’s level of around 152 percent.
Barkindo also said it was not unusual for the United States to put pressure on OPEC as some U.S. energy secretaries had asked the producer group to help lower prices in the past.
Oil prices fell more than 2 percent towards $77 a barrel on Friday as Saudi Arabia and Russia said they were ready to ease supply curbs.