A decline in United States stocks is a welcome sign ahead of the upcoming OPEC meeting this week in Vienna, where Saudi Arabia's plans to increase production limits in cahoots with Russian Federation are expected to run into tense opposition from other OPEC members including Iran, Iraq, and Venezuela.
But Opec's crunch meeting in Vienna on Friday finds the oil cartel divided after almost two years of unity over production curbs, which were due to run until the year's end. Saudi Energy Minister Khalid al-Falih said on Thursday the world needed at least an extra 1 million bpd to avoid a shortage in the second half of 2018.
Pioneer Natural Resources chairman Scott Sheffield-who is in Vienna for an worldwide OPEC conference-warned that oil prices could jump to $100 a barrel if the cartel and friends don't boost production.
The Saudi proposal involves a complex calculation based on how much the group has cut production beyond the initial target of 1.8 million barrels a day set in 2016, the delegates said, asking not be named discussing private meetings.
Brent reached a 3-1/2-year high above US$80 a barrel last month but has fallen steadily in recent weeks as Saudi Arabia, de facto leader of OPEC, has signalled it intends to raise production to stabilize prices.
Other OPEC-members, including Iran, are against such a move, fearing a sharp slump in prices.
Saudi Arabia, under pressure from U.S. President Donald Trump, wants to unwind some of the cuts by engineering a "moderate" supply boost in the second half of the year.
Iran had been expected to oppose any rise in crude output, but it has now signalled it may support a small increase.
Trump has in recent months repeatedly blamed OPEC for a spike in oil prices, but Zanganeh said it was U.S. sanctions on Iran and Venezuela that had fuelled fears of a supply crunch and put pressure on prices.
Friday's meeting could be a tense affair.
OPEC takes its decisions by unanimity, so if Iran were to wield its veto Saudi Arabia would be left only with the option of assembling a coalition of willing countries to bypass Tehran's opposition. The Iranian oil minister noted that he does not expect the oil producer group to reach an agreement to change its output policy in the upcoming meeting. Zanganeh was due to attend a ministerial committee on Thursday, two sources said. He also criticized Trump, saying his strategies have caused high oil prices. Iran is usually not part of the committee, which includes Russia, Saudi Arabia, the UAE, Oman, Kuwait, Algeria and Venezuela.