In an effort to tackle a looming oil supply shortage, the Organization of the Petroleum Exporting Countries (OPEC) will be discussing output levels at its biannual meeting in Vienna on June 22–23. The cartel is expected to unwind its production cut agreement to calm oil prices.
Oil prices calmed in June after Saudi Arabia and Russia started discussing the possibility of increasing production.
Despite fierce opposition from Iran and Venezuela, OPEC and non-OPEC producers, including Russia, are expected to reach an agreement in Vienna to increase supply.
Iranian Oil Minister Bijan Zanganeh criticized President Donald Trump on June 19, saying oil is not a weapon or a political tool.
“President Trump thinks that [he] can order OPEC and instruct to OPEC to do something. ... It’s not fair, I think, and OPEC is not a part of the Department of Energy of the United States,” Zanganeh said.
Trump recently blasted OPEC for the spike in oil prices.
The Saudi proposal is based on a complex calculation, according to Phil Flynn, a senior energy analyst at the Price Futures Group.
“The kingdom and its allies estimate that total cuts now amount to 2.8 million barrels a day,” Flynn said in an email.
A quota increase of 1 million barrels a day may be too ambitious at this stage.
“In reality, because many countries that have cut the deepest can’t increase production, that would probably translate to just 600,000 barrels a day crude flowing back on to the market,” Flynn wrote.
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