OPEC agreed on Friday to raise oil production by around one million barrels per day from July for the group and its allies, an OPEC source said.
The output gain is nominal. The real increase will be smaller because several countries that recently underproduced oil will struggle to return to full quotas while other producers will not be allowed to fill the gap, OPEC sources have said.
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Industry sources familiar with the oil cartel’s deliberations said the actual increase is likely to total around two-thirds of Saudi Arabia’s lofty target. That’s because some OPEC members would be unable to sufficiently ramp up crude production.
Analysts say supply increases are more likely to fall in a range between 600,000 to 800,000bpd.
Saudi Energy Minister Khalid al-Falih said Friday that no-one should expect to see an “immediate flood” of oil coming back onto the market following the meeting.
He also warned the world could face a supply deficit of 1.8 million bpd in the second half of 2018 and that it was OPEC’s responsibility to alleviate consumers’ concerns.
OPEC’s agreement with Russia and other producers to limit oil output has helped to clear a global supply overhang that weighed on prices for years. But with crude futures recently soaring to multi-year highs on strong demand, dwindling output from Venezuela and renewed U.S. sanctions on Iran, energy ministers are worried about the market overheating.