The Organisation of the Petroleum Exporting Countries (OPEC) looks to have agreed to a 1 per cent increase in world oil production after believing that it has overcome differences between Saudi Arabia and Iran. The decision was taken after major consumers warned of supply shortages.
According to Reuters, Saudi Arabia and Russia – a non-OPEC member – said that an increase in production by about 1 million barrels per day, equivalent to about 1% of global supplies, from early July, has almost been agreed upon by the group and its allies,.
However, OPEC sources said that the actual increase in oil production would be less than expected because several countries which have produced less than their quotas will find it difficult to return to their full output, and other producers will not be allowed to fill the gap.
OPEC met in Vienna amid calls from the US, China and India to cut the price of crude oil and prevent a shortage that may harm the global economy.
The 14 OPEC member states, along with the 10 non-members, are producing less oil than the amount agreed upon in late 2016. This is due to the political crises in Venezuela and Libya, as well as Iran’s preparation to face the effects of renewed US sanctions.
In theory, OPEC needs the approval of all members in order to conclude an agreement. However, in the past, it has approved agreements without the consent of Iran, which has criticised the idea of increasing supplies because rising prices are in Tehran’s interest due to its heavy reliance on oil revenues.