Oil ministers back output hike despite Irans walkout

The Organization of Petroleum Exporting Countries would need to ratify the recommendation on Friday at its formal meeting.

Russian Federation and Saudi Arabia agreed to increase outflow by around 1.5 million barrels a day to steady the market as USA sanctions on Iran and political instability in Venezuela are expected to affect global production.

Iran's oil minister, Bijan Namdar Zanganeh, questioned this week whether OPEC is united enough to reach any agreement, and said Trump had politicized the debate over oil prices.

Trump slapped fresh sanctions on Tehran in May and market watchers expect Iran's output to drop by a third by the end of 2018.

Oil prices rose more than 2% Friday after OPEC reportedly reached a deal to ease supply cuts that have been propping up prices for almost two years.

The 24 nations in the pact, known as OPEC+, are now keeping more than two million bpd off the market. The talks, held as the cartel hosted an worldwide energy conference attended by hundreds of officials, executives and investors, will shape oil prices, energy stocks and currencies of petroleum-exporting countries for months to come.

"It will be enough for now but not enough for the fourth quarter to address a decline in Iranian and Venezuelan exports", said Gary Ross, head of global oil analytics at S&P Global.

"If the volume of spare capacity goes down then the market gets much more vulnerable to supply shocks", said Essner, the Nasdaq analyst.

The Organisation of the Petroleum Exporting Countries (OPEC) meets on Friday to decide output policy amid calls from major consumers such as the United States and China to cool down oil prices and support the global economy by producing more crude.

The U.S. has reimposed sanctions, but it doesn't want its consumers to pay the price for that at the pump.

The OPEC meeting began around 1000 GMT and was continuing after two and a half hours.

"Our customers have spoken loudly and we must listen to them", Falih said.

Zanganeh has said that if OPEC returned to regular compliance, the group would raise output by around 460,000 bpd.

That would effectively mean a modest boost from producers such as Saudi Arabia that has been cutting more deeply than planned despite production outages in Venezuela and Libya.

Iraq's energy minister said it was clear that Opec and its allies would change course after 18 months of production curbs, in an effort to rebalance crude supply and demand.

If all Opec members produced as much as they were allowed under the deal, Opec output would in theory rise by about 740,000 barrels per day, based on Reuters estimates of the group's production in May.

"This puts Saudi Arabia in a tough position, as unanimity is needed for any accord to be reached", it added.

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