Report: Saudi targets oil increase of up to 800,000 bpd – source

MOSCOW, Jun 21 (PRIME) -- Saudi Arabia is targeting a collective production increase of 600,000 to 800,000 barrels a day at the meeting of OPEC and Russia later this week, the Financial Times reported late Wednesday citing a senior OPEC source familiar with the kingdom.

The target, which it proposes would be shared proportionally between all members of the so-called OPEC+ group that are capable of raising output, has not yet been finalized but is forming the basis of discussions with other countries.

Saudi Arabia’s energy minister Khalid al Falih said on Wednesday that it was time for the group to “change course and respond to the market” but stopped short of saying how large he thought any production increase should be.

Saudi Arabia and Russia have been proposing raising output after oil prices hit a four-year high above U.S. $80 a barrel, prompting concern among consumer countries, including the U.S., China and India.

Iran, OPEC’s third-largest producer, has broadly opposed an increase with its oil minister Bijan Zanganeh on Wednesday saying the group should not be directed by the U.S.

But the Saudi minister said he was hopeful the group was moving towards a deal.

The OPEC source said there were still negotiations to be had with Russia, whose energy minister Alexander Novak this week proposed an increase as large as 1.5 million barrels per day, a move that would reverse the majority of a supply cut deal that has been in effect for 18 months.

Discussions are likely to be complicated over Friday and Saturday’s meetings in Vienna by the need to agree a suitable baseline for the adjustment to production.

The 600,000-800,000 barrel per day target would be real physical additions of barrels so the announced number could be higher or lower depending on the baseline used.

Venezuela’s output has fallen far further than intended under the deal due to a political and economic crisis in the country, contributing to oil’s near 75% rally since the deal was announced.

While the original deal targeted cutting 1.8 million barrels per day when it was agreed in late 2016, the actual amount has risen closer to 2.7 million barrels per day.

Earlier this week Saudi Arabia was privately briefing delegates and analysts that it is seeking an increase of between 300,000 barrels per day and 600,000 barrels per day, suggesting it may have since raised its target.

At an OPEC seminar in Vienna on Wednesday, oil executives from outside the cartel warned a sizeable increase was needed to prevent prices rising towards $100 a barrel, due to supply drops in Venezuela and Libya and renewed U.S. sanctions on Iran.

Whatever the final figure it wants to ensure any additional barrels are brought on gradually and wants to avoid renewed oil price falls.

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