Russia Repeats Oil-Hike Proposal as Iran Digs In: OPEC Update

June 19, 2018, by Grant Smith, Salma El Wardany and Laura Hurst

(Bloomberg)

Oil ministers from OPEC and its allies are starting to arrive in Vienna for what promises to be one of the cartel’s most contentious meetings in years. (All timestamps CET.)

Russia Still Favors Big Hike Despite Prevailing View (1:38pm)

Russia’s energy minister reiterated that OPEC should consider a 1.5 million-barrel-a-day increase to output quotas because the market is almost balanced.

High seasonal demand could translate into a supply deficit next quarter if OPEC and its allies don’t move to raise production, Alexander Novak said in Moscow. The minister said he had “no official information” that some countries would block a decision to boost output.

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Russia’s push for a big ramp-up contrasts with the more modest increase being debated by OPEC ahead of this week’s summit. Members are discussing a proposal to deliver 300,000 to 600,000 barrels a day of additional oil to global markets over the next few months, according to people briefed on the talks.

Russia’s proposed 1.5 million-barrel increase would be allocated proportionally among all members of the group. That means only about two-thirds of the volume would likely flow to the market because countries including Venezuela and Mexico are unable to raise output.

Iran Says Keep Curbs, While Libya Cuts Involuntarily (11:55am)

OPEC’s No. 3 producer, Iran, urged fellow members to “do nothing about production,” warning that a relaxation of output curbs would swell stockpiles again.

“Increasing production at this time would be an attempt to build stocks,” said Iran’s OPEC governor, Hossein Kazempour Ardebili. “This cyclic play is not accepted!”

Meanwhile, war-torn Libya reported a 400,000-barrel-a-day drop in output after an armed assault on its third-largest port, adding to global supply concerns currently centered on Venezuela and Iran.

Workers at the Ras Lanuf terminal are trying to put out a fire and “stabilize the situation” before the national oil company can “think what to do” about production, Chairman Mustafa Sanalla said in Vienna.

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