OPEC Agrees to Boost Oil Output

Oil prices rose sharply after OPEC agreed to only a modest increase in output, well below some of the figures that had been discussed ahead of the meeting. Even after the group's decision had been announced, Trump was still tweeting hopefully about OPEC increasing production. The production increase will partly undo a 1.2 million barrel cut Opec agreed on in late 2016 that has helped push up the price of oil.

Oil hit almost $80 per barrel last month, sending gasoline prices in the United States above $3 per gallon in many areas for the first time in years. Iran, OPEC's third-largest producer, had demanded OPEC reject calls from Trump for an increase in oil supply, arguing that Trump had contributed to a recent rise in prices by imposing sanctions on Iran and Venezuela. That means Friday's agreement will end up adding about 600,000 barrels of oil a day to the global market. But many members cut even deeper, and political events around the world-turmoil in Venezuela and the end of the USA nuclear deal with Iran-took additional volume off global markets. "The effective increase in output can easily be absorbed by the market", Harry Tchilinguirian, head of oil strategy at French bank BNP Paribas, told Reuters. "We're taking our breath and focusing on the oil market", said Ryan Detrick, senior market strategist at LPL Financial in Charlotte, NC.

Falih has warned the world could face a supply deficit of up to 1.8 million bpd in the second half of 2018 and that OPEC's responsibility was to address consumers' worries. "I think Saudi [Arabia] wants to prevent that".

OPEC's deal to release more supply centres on returning to 100 percent compliance with existing, agreed cuts. Compliance has been well above 100% this year since some countries, notably Venezuela, have seen a drop in production. "As individual countries, it is challenging", said United Arab Emirates Energy Minister Suhail bin Mohammed al-Mazroui.

Iran has objected to having members with additional capacity such as Saudi Arabia fill Venezuelan output gaps. The next formal OPEC meeting was set for December 3.