The contentious meeting took place under the shadow of vituperation from U.S. President Donald Trump, who anxious that high oil and gasoline prices would be politically painful ahead of midterm elections later this year. Trump's threat, made in a tweet, followed the EU's announcement that it would place duties on a range of U.S. products. Subsequently, WTI and Brent crude futures rose with the latter briefly above $75/bbl, given that markets had feared that OPEC would agree a larger production, while the 1mln bpd increase will likely represent a real increase of 600-700k bpd, which had been largely priced in.
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. The measure had helped rebalance the market in the past 18 months and lifted oil LCOc1 to around $75 per barrel from as low as $27 in 2016. The figure has been inflated by a plunge in supplies from almost bankrupt Venezuela. If we lose a million bpd of output from Venezuela and Iran in the fourth quarter, where will all these barrels come from?
But Iranian Oil Minister Bijan Zanganeh said that was not the case: "Each country which has produced less (than its allocation) can produce more".
Al-Falih has warned the world could face a supply deficit of up to 1.8 million bpd in the second half of 2018 and that OPEC's responsibility was to address consumers' worries.
"The aim of the deal is to return total compliance to the current output agreement to 100%". Venezuela's production has dropped amid domestic political instability.
OPEC and its allies have since a year ago been participating in a pact to cut output by 1.8 million bpd.
Support for the increase, which had been proposed by Saudi Arabia against objections from Iran, was unanimous, he said.
"Both Saudi and Iran can show that they won", an OPEC delegate said.
"There was a lot of anticipation in the market that there was going to be a lot of new oil coming to market, and that isn't going to happen, at least for now", said John Kilduff, a partner at Again Capital. Venezuela will raise its production when it can. "OPEC is set to hold the next biannual meeting on 3 December", wrote analysts at Danske Bank.