OPEC and allies struggle to pump more oil as Iran supply falls

People walk past a billboard for the 10th meeting of the OPEC Joint Ministerial Monitoring Committee in Algiers Algeria. — Reuters

People walk past a billboard for the 10th meeting of the OPEC Joint Ministerial Monitoring Committee in Algiers Algeria. — Reuters

A decade ago, Brent crude surged to almost US$150 a barrel, only to crash just months later as high fuel prices and the global financial crisis triggered a slump in demand.

OPEC launched the report on Sunday in Algiers, as its members met there with allies to discuss whether to increase production.

The United States is coordinating policy on sanctions and production closely with both Saudi Arabia and Russia; the US energy secretary has met both his Saudi and Russian counterparts in the last fortnight.

Such prices made oil companies like Exxon Mobil Corp. the world's most valuable firms and spurred investment in risky billion-dollar oil projects.

American tight oil production will rise to 16 MMbpd by the late 2020s, the report said, making up nearly 25% of total non-OPEC supply by then. This comes after the US Congress has reconsidered legislation aimed at preventing OPEC from manipulating oil prices.

Saudi energy minister Khalid al-Falih said at a press conference in Algiers that he did not "influence prices".

They are trying to dispel concerns about possible supply shortages stemming from U.S. economic sanctions against Iran.

Brent crude climbed above $80 a barrel to its highest level since November 2014 after OPEC and its allies signalled less urgency to boost output, despite USA pressure to temper prices.

OPEC leader Saudi Arabia and its biggest oil-producer ally outside the group, Russia, effectively rebuffed Trump's demand to lower prices on Sunday and failed to provide answers on how they would counter falling supplies from Iran.

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Delegates from major oil-producing nations have agreed to continue working to boost output.

Higher gasoline prices for US consumers could create a political headache for Trump before November mid-term congressional elections.

For all these urgent supply pressures, the world's largest oil producers adopted a sit-back-and-wait approach at their meeting in the Algerian capital on Sunday.

The higher oil prices could cause problems for Trump in the lead up to the midterm congressional elections in November.

"The conditions of the market and the production status of oil producers are not as such to allow finding an easy replacement for Iran's oil and remove it from oil markets".

The Secretary-General of OPEC Mohamed Senusi Barkindo said that the efforts exerted by member states and non-members of the organisation have enabled the restoration of stability in the market, calling for continued dialogue on market fluctuations in order to maintain its balance.

Falih said attending ministers "showed us that they have spare capacity that they are ready to deploy if there is demand for it, if it is required by any shortfall".

WTI for November delivery added as much as $1.61 to $72.39 a barrel on the New York Mercantile Exchange.

In August, OPEC and its allies cut production by 600,000 bpd more than their pact required, mainly as a result of falling output in Iran as customers in Europe and Asia reduced purchases ahead of the United States sanctions deadline. Early last week, the market was supported by a report which said Saudi Arabia would be comfortable with Brent prices over $80 a barrel.

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