OPEC and allies struggle to pump more oil as Iran supply falls
* Supply drop comes amid pressure from Trump to lower oil
* OPEC, allies meeting in Algiers as Iran sanctions bite
* Producers mull raising crude supply by 500,000 bpd -
(Adds Oman oil minister)
By Ahmad Ghaddar and Olesya Astakhova
ALGIERS, Sept 22 (Reuters) - OPEC and its allies reduced oil
output in August as a drop in Iranian supply due to U.S.
sanctions derailed their attempts to raise production to agreed
levels, delegates said on Saturday as the energy producers
prepared to hold talks in Algiers.
The development further raises pressure on the Organization
of the Petroleum Exporting Countries to boost supply amid calls
from U.S. President Donald Trump to lower oil prices.
On Friday, a source familiar with the discussions told
Reuters OPEC and its allies led by Russia were considering the
possibility of raising crude supplies by a further 500,000
barrels per day (bpd) as U.S. sanctions on OPEC's third-largest
producer, Iran, bite into Tehran's exports.
"If an increase in production is proposed there will be
plenty of market counter-argument that it reduces even further
the available spare capacity," Olivier Jakob from consultancy
"Saudi Arabia has made the mistake of trying to compensate
for the loss of Iranian supplies with just-in-time replacement;
but the oil market is looking for greater supply security than
that. As a result, the strength of oil prices is now putting oil
demand growth at risk," he added.
An OPEC and non-OPEC monitoring committee gathering in the
Algerian capital this weekend found that oil producers'
compliance with a supply-reduction agreement reached 129 percent
in August, two committee delegates said.
This compares with a compliance level of 109 percent for
July, indicating that the group went beyond its agreed cut.
Oman's oil minister Mohammed bin Hamad Al-Rumhy told
reporters on Saturday that OPEC and non-OPEC producers
overachieved on pledged output cuts by 600,000 bpd in August,
putting the reduction at around 2.4 million bpd.
Seeking to reverse a downturn in oil prices that began in
2014, OPEC, Russia and other allies decided in late 2016 to
reduce supply by some 1.8 million bpd.
In June this year, however, after months of cutting by more
than their pact had called for amid involuntary reductions from
Venezuela and other producers, they agreed to boost output by
returning to 100 percent compliance.
That equates to an increase of about 1 million bpd, but the
latest figures show they are some way from achieving that
Oil reached $80 a barrel this month, prompting Trump
to demand again that OPEC bring down prices.
"We protect the countries of the Middle East, they would not
be safe for very long without us, and yet they continue to push
for higher and higher oil prices! We will remember. The OPEC
monopoly must get prices down now!" he wrote on Twitter.
Higher gasoline prices for U.S. consumers could create a
political headache for Trump before November mid-term
OPEC sources said any official action to raise output would
require OPEC to hold what it calls an extraordinary meeting - a
proposal that is not on the table yet.
But the joint OPEC and non-OPEC ministerial committee known
as the JMMC, which meets on Sunday, can still recommend a
further increase in output if needed, the sources said.
(Additional reporting by Rania El Gamal; Editing by Dale
First Published: 2018-09-22 12:03:01
Updated 2018-09-22 18:52:06
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