Prices Dip Slightly on Reports Iran May Agree to Small Production Hike


The world faces likely lower oil exports from Iran, Opec's third-biggest producer, after US President Donald Trump pulled out of a 2015 nuclear accord with a vow to renew sanctions against Tehran.

Benchmark U.S. crude hit its highest level in more than three years in May, but U.S. and worldwide prices have eased since then in anticipation that OPEC will approve more drilling.

Three Opec members - Iran, Venezuela and Iraq - have been reluctant to consent to a formal increase in Opec's output target, agreed as part of a deal with Russian Federation and other non-member producers and running until the end of 2018.

Oil prices surged almost 75 percent, touching $80 a barrel, after OPEC and allies agreed to cut production in late 2016.

WTI briefly turned positive earlier in the session after energy information provider Genscape said crude inventories at the key Cushing, Oklahoma hub were expected to have dropped by 2.3 million barrels in the week since Tuesday, traders said, alleviating some concerns that surging USA production would outstrip demand.

If this threat turns into reality, USA crude oil-which is now in high demand in Asia due to the wide $9-a-barrel discount to the Brent Crude global benchmark-will become uncompetitive.

"We are making good progress", said United Arab Emirates Energy Minister Suhail Al Mazrouei, who also now holds the position of OPEC president.

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UAE Energy Minister Suhail Mohammed al-Mazrouei added: "I am very optimistic".

More important to Saudi Arabia than extra petrodollars is containing Iran, its arch-nemesis.

The kingdom's plan involves a complex calculation based on how much the group has cut production beyond the initial target of 1.8 million barrels a day set in 2016, said delegates, asking not be named discussing private meetings.

Saudi Arabia and its allies estimate that total cuts now amount to 2.8 million barrels.

"Allocating to Saudi Arabia part of the quota of countries that cannot increase output could be a technical solution, but may not be a political one", Al-Falih said. The proposal has yet to win the backing of all OPEC members, and may meet resistance from more hawkish countries in the group including Venezuela and Algeria as well as Iran.

"Iraq is trying very hard to narrow the gap between the two blocs".

Russia, which is not in OPEC, has proposed producers raise output by 1.5 million bpd. India's trade deficit in May widened to $14.62 billion, the highest in four months, driven mainly by a 50 per cent surge in the country's oil import bill. To contact the reporters on this story: Wael Mahdi in Kuwait at; Grant Smith in London at; Javier Blas in Vienna at All comments are subject to editorial review.