OPEC countries have agreed to a deal that would effectively increase their combined output by a modest 1 million barrels a day, although it was not immediatetely clear what the effect on prices would be or if the agreement could be carried out in full by some countries.
United Arab Emirates Minister Suhail al-Mazruei said on June 22 after an OPEC meeting in Vienna that the cartel had decided to fully comply with its existing production ceiling, as reluctant Iran ended up agreeing to a plan pushed by bitter rival Saudi Arabia.
Because the group had been producing below the ceiling, the agreement effectively means a production increase that Mazruei said amounts to "a little bit less than 1 million barrels" a day.
Saudi Oil Minister Khalid al-Falih said that "I am pleased that at the end of the day we reconciled around the 1 million figure that we have been talking about."
Falih added that support for the increase -- which had been resisted by Tehran -- was unanimous among cartel members.
The plan is set to be formalized on June 23 at a meeting between OPEC and several non-OPEC countries in Vienna, part of the OPEC+ format of 24 countries.
The Saudis, backed by non-OPEC member Russia, have urged fellow producers to increase output to meet growing demand and appease consumer countries that have complained about a recent rise in market prices.
However, experts said the modest nature of the agreed increase created uncertainty on markets, and global prices actually rose after the announcement, with Brent crude -- the international benchmark -- rising $1.61 a barrel to $74.66.
"OPEC has once again underdelivered," research director Nitesh Shah of Wisdomtree told Reuters. "The impact should be [a price increase]. All they agreed to was to get back to 100 percent compliance at the group level."
The calls to raise output somewhat reverse the OPEC+ agreement in late 2016 to cut production by 1.8 million barrels a day to help then-slumping prices. Experts say the OPEC+ countries had actually been cutting far more than that.
Producing at 100 percent of the ceiling would thus bring about the 1 million barrel-a-day production increase, officials said.
However, some OPEC countries are not easily able to hike production. Iran has been hit by U.S. sanctions, while Venezuela's production has declined amid political instability in the South American country. The actual increase will be about 750,000 barrels a day, Iraqi officials estimated.
Iran, which relies heavily on higher oil prices to boost revenue, had resisted increasing production, and the country’s oil minister, Bijan Zanganeh, had walked away from negotiations before the Vienna meeting.
OPEC sources said Zanganeh demanded that U.S. sanctions be mentioned in the group's postmeeting communique, as Tehran has blamed the U.S. measures for causing the recent sharp rise in oil prices.
However, Saudi Arabia’s Falih persuaded Zanganeh to support the increase just hours before the June 22 talks began.