Oil declines as Opec, allies differ over output

Oil fell for a fourth consecutive week as Saudi Arabia and Russia prepared for a clash with allied crude producers over whether to raise production.

Crude futures slumped 2.7 per cent in New York on Friday, the steepest decline since May 25. Saudi and Russian officials in favour of relaxing historic supply limits will meet resistance from Iran, Iraq and Venezuela at an Opec-led meeting this week. Russian Energy Minister Alexander Novak has advocated lifting the caps as soon as July 1.

“The Russians are now pushing for a bigger increase than what we expected earlier, and Opec is divided now,” said John Kilduff, a partner at Again Capital LLC. “The Saudis are trying to moderate what’s going on, but it will be a volatile week going into the meeting with tons of headline risk.”

The Russians are suggesting the 24-nation coalition that began cutting output about 18 months ago lift daily production by 1.5 million barrels, the same amount the International Energy Agency expects to disappear as economic and political crises seize Venezuela and Iran.

Saudi Arabia has been discussing different scenarios that would raise production 500,000 and 1 million barrels a day, according to people familiar with the matter.

Brent futures for August settlement fell $2.50 to $73.44 on the London-based ICE Futures Europe exchange while West Texas Intermediate crude for July delivery fell $1.83 to settle at $65.06 a barrel on the New York Mercantile Exchange. The global benchmark traded at an $8.59 premium to West Texas Intermediate for the same month.