Saudi Arabia and some other countries used Iran’s partial absence from the market under sanctions to export beyond their OPEC quotas, with a result that the OPEC output for July stood at 33.69 mbpd while the official ceiling is 30.45 mbpd. “We can’t allow each country to use a different method”, the source said.
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U.S. light crude was up 90 cents at $46.40 a barrel, having ended the previous session up 67 cents.
“Iran’s condition appears to be that OPEC must agree to allow Iran to return to its historical OPEC export quota and pre-sanction production levels – a hard ask”, they wrote in a note.
OPEC supplies about 40 per cent of the world’s oil pumping 32.5 million barrels per day.
Despite rebounding this year, oil is trading at less than half mid-2014 peaks above $100 a barrel.
Benchmark Brent crude oil was up 75 cents a barrel and stood at $48.73, while WTI crude prices recorded an increase of 85 cents and stood at $46.35 per barrel, Reuters reported.
Although no formal agreement was mentioned on freezing production levels, a move that could help to support global oil prices which slumped on an glut in supply, the agreement was seen as “meaningful” by analysts as it marked a further step towards putting a floor under oil prices.
However, the bumper gains were all but wiped out after the statement underwhelmed the market and provided scant detail about their plans.
Iran signalled on Tuesday it was prepared to work with Saudi Arabia and Russian Federation to prop up oil prices as Tehran began to bargain with OPEC on possible exemptions from output limits.
US crude stocks surprisingly plunged by 12.1 million barrels last week, data from the American Petroleum Institute showed after market settlement on Wednesday, compared with expectations for an increase of around 200,000 barrels.
He said the price of oil at $55/b would be suitable, saying, “This price makes production of oil by OPEC members profitable, economical and useful, while preventing the rivals from raising their output”. Iran is expected to oppose any output freeze.
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Oil rose on Wednesday to pare some of the previous day’s losses, partly thanks to a weaker USA dollar, but the limited likelihood of a near-term agreement among the world’s biggest exporters to rein in production kept gains in check.
