Iran, Saudi oil ministers meet to avert showdown

Saudi Arabia is ready to add back production it had agreed to curb in 2016, even though it is benefiting hugely from a almost 75% spike in oil prices.

"Globally, crude prices have gone beyond the threshold, which can be sustained by the world, particularly countries like India, which is a key driver of world economy", Mr. Pradhan said at an OPEC conference in Vienna.

"An initial increase of between half a million and a million barrels is expected to be agreed which will be welcomed by Trump who has been targeting OPEC as of late", Craig Elam, senior markets analyst at OANDA, said.

Saudi Arabia's Oil Minister Khalid al-Falih talks to journalists at the beginning of an OPEC meeting in Vienna, Austria, June 22, 2018. The measure has helped rebalance the market in the past 18 months and lifted oil to around $74 per barrel from as low as $27 in 2016.

Volatility was the theme on Wednesday as bearish traders continue to support the notion that Saudi Arabia and Russian Federation would push for at least a 1 million barrel per day increase in production, while bullish investors priced in opposition to the increase by Iran, Iraq and Venezuela.

Iran has bulked at the request because it faces sanctions after President Donald Trump ripped up an global nuclear agreement.

So far there is no indication that Iran and the other members would agree to such a reallocation, although with officials holding extensive talks in the run-up to Friday's Opec meeting, further compromise could be made.

On Wednesday, U.S. crude closed at $65.74 a barrel, down from a peak of almost $73 last month, and Brent crude, the worldwide standard, closed at $74.61, down from $80. Brent, the worldwide benchmark, was up 1.85% to $74.80 a barrel.

The odds of OPEC reaching an oil-production deal increased as Iran edged away from a threat to veto any agreement that would raise output and Saudi Arabia put forward a plan that would add about 600,000 barrels a day to the global market.

If we lose a million bpd of output from Venezuela and Iran in the fourth quarter, where will all these barrels come from?

The 24 nations in the pact, known as OPEC+, are now keeping more than two million bpd off the market.

"Our customers have spoken loudly and we must listen to them", Falih said. Iran is usually not part of the committee, which includes Russia, Saudi Arabia, the United Arab Emirates, Oman, Kuwait, Algeria and Venezuela.

Earlier this week, Zanganeh left the door open for a deal, saying OPEC members that had overdelivered on cuts in recent months should comply with agreed quotas.

Falih, in a nod to the problems with faltering production in Venezuela, Iran, and Libya, acknowledged that "not every country" will be able to join the production increase.

"An agreement was reached yesterday to release the equivalent of about 1m barrels to the market; it will be distributed pro rata", Al-Falih said on Friday, of an Opec committee meeting on Thursday. A separate meeting of OPEC members and non-members, .

On Friday, Zanganeh said OPEC would change the structure of the current deal, but declined to elaborate.