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OPEC agrees to pump more oil and crude prices jump

OPEC agrees to pump more oil and crude prices jump

The countries of the OPEC oil cartel agreed Friday to effectively increase their combined production by nearly 1 million barrels a day, though questions remain over some of the members' ability to do so amid domestic trouble and sanctions.

The production increase will partly undo a 1.2 million barrel cut OPEC agreed on in late 2016 that has helped push up the price of oil. But don't expect a drastic drop in oil price.

"Twitter is not one of the instruments we base our decisions on", Novak added, referring to Trump.

The effective increase in supply, due to crunch in other nations like Venezuela, could be 770,000 bpd, which is less than half the amount OPEC reduced in supply in 2017.

Faced with a tricky scenario, the world's largest crude exporter Saudi Arabia has been under vast pressure from all around, including Washington, to act and increase output. Indeed it was not the Clinton era, when in 2000, Bill Richardson, the then energy secretary during the second Clinton administration, phoned Ali Naimi, the then Saudi oil minister, in the middle of an Opec meeting, asking for a production increase.

Further to OPEC being blindsided by the rise of shale oil, the global "Easy-Money" environment perpetuated by central banks - namely the US Fed's Quantitative Easing (QE) program - has also played a key role in the Shale supply-boom.

European carmakers' shares fell sharply after US President Donald Trump threatened to impose a 20 per cent tariff on all European Union-assembled cars imported into the United States, if EU "tariffs and trade barriers" are not removed.

Saudi Arabia, supported by Russian Federation, was strongly in favour of pumping more oil to ease fears of a supply crunch and quiet grumbles about the higher prices in major consumer countries like the United States, China and India.

"Certainly the longer it drags out, the market is bound to see some pressure, at least in some sectors and with certain companies", said Ghriskey.

But unexpected outages in Venezuela, Libya and Angola have effectively brought supply cuts to around 2.8 million bpd in recent months.

Worldwide marker, Brent, traded above US$100 a barrel for several years until 2014, dropping to nearly US$26 in 2016 and then recovering to over US$80 last month. "Falih can go back and say "we will be able to raise production to meet market needs".

Returning to Friday's output agreement, the official communique was a classic piece of OPEC-speak - short on figures and something that everyone could claim as a victory. "As individual countries, it is challenging", said United Arab Emirates Energy Minister Suhail bin Mohammed al-Mazroui. Hence it compromised, creating a win-win situation for both the groups within Opec.

"Zanganeh can go back to his country and say "I won", because we are keeping the original agreement unchanged".

Al-Falih said after Saturday's meeting in Vienna that tweets from Trump were "reflective of his concern for American consumers". The next formal OPEC meeting was set for December 3.

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