Oil falls 2% as Opec nears deal to raise output
LONDON: INDIA URGES OPEC FOR RESPONSIBLE OIL, GAS PRICING
Oil prices fell on Thursday as crude exporters in Opec appeared to be nearing a deal to increase production.
Benchmark Brent crude fell $1.76 a barrel, or more than 2%, to a low of $72.98 before recovering slightly to $73.34, down $1.40, by 09.45 GMT. US light crude was $1.00 lower at $64.71.
Brent reached a 3-1/2-year high above $80 a barrel last month but has fallen steadily in recent weeks as Saudi Arabia, de facto leader of Opec, has signalled it intends to raise production to stabilise prices.
The Organization of the Petroleum Exporting Countries holds its biannual meeting in Vienna on Friday and is widely expected to agree to pump more, possibly supported by some other producers outside Opec, including Russia. Iran had been expected to oppose any rise in crude output, but it has now signalled it may support a small increase.
“We need to release supply to the market,” Saudi Arabian energy minister Khalid al-Falih told reporters in Vienna.
Falih said the oil market had now rebalanced and his aim was to prevent a shortage of crude in future that could squeeze the market.
Harry Tchilinguirian, head of oil strategy at French bank BNP Paribas, told Reuters Global Oil Forum he expected Opec and Russia to agree a compromise that would see a small increase in global oil production.
“It would seem that an aggregate increase in production for Opec+ of between 500,000 barrels per day (bpd) and 1 million bpd is the range that is being considered,” Tchilinguirian said. Vienna India on Wednesday urged the Opec cartel to move to responsible pricing of oil and gas, saying the current prices are posing a threat to fragile world economic growth.
Addressing an Opec seminar here, the petroleum minister Dharmendra Pradhan said global trade practices in the hydrocarbons sector are not contributing to energy access and affordability to all.
Opec, together with other key producers including Russia, started withholding output in 2017 to prop up prices, but a tightening market has led to calls by consumers for more supplies.
Looming over all financial markets is an escalating trade dispute between the US and its other major trading partners, particularly China. Washington and Beijing have both threatened punitive tariffs on each other’s exports, including US crude oil.
China on Thursday cancelled a trip to West Virginia by executives from China Energy Investment Corp. to discuss a planned $83.7 billion investment in the state and called Washington’s behaviour “capricious.” In another escalation, India joined China and the EU by increasing duties on various commodities imported from the US.