OPEC issued a communique on Friday that called on a return to 100 percent compliance for the group, down from 152 percent in May. The announcement deferred country-specific allocations, likely because they could not agree on the details. The decision likely means that any country with spare capacity will be able to boost production. In practice, Saudi Arabia and Russia will carry the lion’s share. How individual countries make decisions about how much to produce, while still trying to stay below a collective cap, opens up a lot of uncertainty.
The Financial Times reports that this arrangement meant that Saudi Arabia has struck a deal that will see Opec and its allies increase oil production by up to 1m barrels a day in an effort to cool a rally in crude prices that has lifted them to their highest level since 2014.
Khalid al Falih, the kingdom’s energy minister, who has faced pressure from the US and other big oil importers to cap prices before they harm the broader economy, said Opec members would move to raise output. The deal, if rubber-stamped as expected on Saturday by non-Opec producers including Russia, could see Saudi Arabia and other nations with spare production capacity boost output at the expense of their peers.
“It will be 1m [b/d] collectively,” Mr Falih said, adding that some countries were better placed to raise output than others. The agreement was reached despite opposition this week from Iran, whose oil minister Bijan Zanganeh argued that raising oil output was tantamount to doing the bidding of US President Donald Trump, who has accused the cartel of “artificially” raising prices.