An agreement between OPEC, Russia and other oil-producing countries was reached over the weekend promising to raise oil supply beginning July. Global markets are optimistic about receiving approximately one million barrels of oil supply a day. The supply boost is bound to happen after Saudi Arabia pledged to act decisively so as to tame oil prices.
An OPEC only agreement is what had been announced on Friday by the organization of the Petroleum Exporting Countries. This caused the Brent oil prices to rally. It is on Saturday that non-OPEC oil producers agreed to join the meeting. However, heavy disagreements between Saudi Arabia and Iran yielded no results, hence, no concrete numbers were reached.
This raised concern among several leaders, even prompting the U.S President, Donald Trump, to inquire how much more oil OPEC would supply. He hoped that the organization would raise its supply substantially in order to keep the oil prices down. The United States, China, and India urged the oil producers to increase supply so as to prevent an oil deficit that could hinder global economic growth.
Eventually, Saudi Energy Minister, Khalid Al-Falih, told reporters that consumers can rest assured that their energy supplies are available and are being stewarded by a responsible group of producers. He took his time clarifying how the OPEC and the non-OPEC deal would work. The minister stated that it would be worrying if the jump in prices became a trend. He promised that producers with spare capacity can fill any gap left by falling production elsewhere.
Saudi Arabia, which is the highest global exporter will raise its oil supply by hundreds of thousands of barrels per day. However, the exact figures are said to be decided upon, later. According to Russian Energy Minister Alexander Novak, his country will also increase its supply to about 200,000 barrels per day beginning July.
The U.S president had in May slapped Iran with sanctions. Market experts feel that this would result in the country’s supply dropping by a third by the end of this year. It means that unlike Saudi Arabia or Russia, Iran has no way of gaining from the latest deal.
An Iranian delegate was quick to criticize the Saudi Arabia’s position. According to the delegate, the agreement did not allow any member to replace someone else’s market share. Venezuela’s energy minister also felt the same since his country has also been slapped with sanctions.
State oil company Saudi Aramco was already prepared for such an outcome and it was already increasing its output. A significant rise in shipments from the kingdom has already been witnessed.