VIENNA (AP) — The countries of the OPEC oil cartel will discuss increasing their production by about 1 million barrels a day at a meeting Friday that could influence the cost of energy globally in coming months.
The group’s largest producer, Saudi Arabia, is seen to be open to higher production but Iran has been hesitant as U.S. sanctions are hindering its ability to export. U.S. President Donald Trump has been calling publicly for the cartel to help lower prices.
Saudi Oil Minister Khalid al-Falih said Friday that an OPEC committee ahead of the official meeting had agreed “to recommend releasing the equivalent of 1 million barrels or thereabout to the market.”
A production increase would help undo a 1.2 million barrel cut agreed on in late 2016 that has since helped push up the price of oil by almost 50 percent. Non-OPEC member Russia had also agreed to that cut and will discuss with OPEC on Saturday whatever production increase the cartel agrees on Friday.
While Iran has voiced skepticism in recent days about the prospect of a production increase, on Friday it sounded more flexible on the idea. Its oil minister, Bijan Namdar Zanganeh, told reporters that, “Some of the countries are against any increase, and ask them. I am not representative of them.”
He said he thinks $70 per barrel would be a “very good” oil price. The international benchmark, Brent, was at $74.19 a barrel on Friday.
The production limits by the Organization of the Petroleum Exporting Countries and Russia have helped increase oil prices, with the benchmark U.S. crude contract hitting its highest level in more than three years in May. Some analysts note that while Trump has blamed OPEC, his policies have also helped increase the cost of oil by, for example, limiting exports from Iran.
Some analysts believe that Saudi Arabia needs a Brent price closer to $90 to cover its domestic spending but is feeling pressure from the United States to head off rising prices by boosting output. Russia may be happy to pump more oil and settle for prices in the $60s, according to Tamar Essner, chief energy analyst for Nasdaq.
There are other considerations than dollars and rubles.
“This is not going to be a decision just based on market analysis and supply and demand,” said Daniel Yergin, the vice chairman of research firm IHS Markit and author of several books on the energy industry. “The geopolitical factors will play in a lot.”
Yergin said Saudi Arabia and the United Arab Emirates support the current, tougher U.S. policy toward Iran, Saudi Arabia’s rival for influence in the region, and so will want to support Trump’s call for higher production and lower prices.
Anthony Mills in Vienna and Geir Moulson also contributed to this report. Koenig reported from Dallas.