The Organization of the Petroleum Exporting Countries (OPEC) met this weekend in Vienna and agreed with Russia and other oil-producing countries to increase production starting in July. Saudi Arabia committed to a “measurable” supply increase but did not provide exact details of what it was planning. Brent crude spiked on Friday in advance of Saturday’s meeting, climbing 3.4 percent to $75.55 per barrel. It remained unchanged on Sunday, but U.S. WTI futures continued to climb, rising 5.71 percent to trade at $69.28 per barrel as of 5:25 p.m. HK/SIN on Sunday.
U.S. President Donald Trump voiced his support of OPEC’s production increase on Friday, tweeting “Hope OPEC will increase output substantially. Need to keep prices down!” Saudi Energy Minister Khalid al-Falih said OPEC and its allies would increase production by an estimated 1 million barrels per day in the coming months, an amount which is roughly 1 percent of global supply.
Despite reports of the new agreement, Iran’s OPEC governor, Hossein Kazempour Ardebili told Reuters that there was no agreement to reallocation on Saturday. The governor’s comments highlight the dispute between Iran and Saudi Arabia as to how OPEC should react to a production shortfall by Venezuela. Venezuela has seen a shortfall in its production of over 500,000 barrels per day below its OPEC target due to natural cause, political upheaval and sanctions by the United States. Iran posits that the shortfall should remain while Saudi Arabia is eager to supplement the production. Kazempour has said that Venezuela’s supply should recover, at least partially, in the next three or four months.