Iran Signals Compromise for Modest Rise in OPEC Output

Iran signalled yesterday that it could compromise on a small increase in OPEC oil output when the group meets this week, as Saudi Arabia scrambled to convince fellow members of the need for a larger rise in production.

This is coming as the Italian court yesterday resumed thetrialofShelland Eni executives over alleged corruption in thesaleofNigeria’sOilProspectingLease (OPL245).

Italy’sSupremeCourthadearlierthrown outanappealfromShellandfourformer Shell managers to stymie a trial.

The Organisation of the Petroleum Exporting Countries (OPEC) meets on Fridaytodecide 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.

Reuters quoted Iran as saying that OPEC was unlikely to reach a deal, setting the stage for a clash with kingpin Saudi Arabia and nonmember Russia, which are pushing to raise production steeply from July to meet growing global demand.

But yesterday, Iranian Oil Minister Bijan Zanganeh said OPEC members that had overdelivered on cuts in recent months should comply with agreed quotas.

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

OPEC Secretary-General Mohammad Barkindo said he was confident there would be a deal when the producer group meets in Vienna on Friday.

Russia has proposed OPEC and non-OPEC producers raise output by 1.5 million barrels per day (bpd), effectively wiping out existing production cuts of 1.8 million bpd that have helped rebalance the market in the past 18 months and lifted oil to $75 per barrel. Oil traded as low as $27 in 2016.

Saudi Energy Minister Khalid al-Falih also said on Wednesday that the market demanded more oil in the second half of this year and that OPEC was moving towards “a good decision”.

Meanwhile, Italy’s court yesterday resumed the long-running graft case over the 2011 purchase by Eni and Shell of Nigeria’s OPL 245 offshore oilfield for about $1.3 billion.The trial kicked off last month, with the next hearing set for yesterday.

Nine current and former executives or contractors, including Eni Chief Executive Claudio Descalzi, have been accused by Italian prosecutors of paying bribes to secure the licence to explore OPL 245.

But the accused denied any wrongdoing.