Above $74: Brent oil rises by $1 ahead of OPEC decision


Benchmark U.S. crude hit its highest level in more than three years in May, but U.S. and global prices have eased since then in anticipation that OPEC will approve more drilling.

The Iran walk-out shows the tension within OPEC after the US, China and India put pressure on the cartel to boost production to ease the pain of high oil prices. The proposal has yet to win the backing of all OPEC members, and may meet resistance from more hawkish countries in the group including Venezuela and Algeria as well as Iran.

Iran has bulked at the request because it faces sanctions after President Donald Trump ripped up an global nuclear agreement.

Trump imposed fresh sanctions on Tehran in May and market watchers expect Iran's output to drop by a third by the end of 2018.

"An agreement was reached yesterday to release the equivalent of about 1m barrels to the market; it will be distributed pro rata", Al-Falih said on Friday, of an Opec committee meeting on Thursday.

Opec and its allies have since a year ago been participating in a pact to cut output by 1.8 million bpd. Oil traded as low as $27 in 2016.

It was up 1.2 per cent at $73.95 a barrel at 1:13 pm in Singapore on Friday.

Saudi Energy Minister Khalid al-Falih has signalled a compromise was in the works as a big hike in production was "politically unacceptable" to some members.

The move infuriated Iran, and Zanganeh refused to sign up to the meeting's decision to raise output.

Once known for rampant cheating on agreed oil output targets, Opec has been over-delivering on a pact in place since January 2017, cutting around one and a half times the promised amount.

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Riyadh has said it is ready "to mitigate the effects of any supply shortages" from United States sanctions on Iran's oil.

Earlier this week, Zanganeh left the door open for a deal, saying Opec members that had overdelivered on cuts in recent months should comply with agreed quotas.

But in practice it would mean a much smaller boost of less than a 10th of that amount, effectively from Saudi Arabia.

"OPEC could keep the same deal with compliance going back to 100%", said an OPEC source who is aware of Iran's stance.

On Friday, Zanganeh said Opec would change the structure of the current deal, but declined to elaborate.

The paper agreement would see production increase by 1 million barrels a day to bring the group back to target.

Mr. Pradhan went on to say that the prices of oil and gas had become subject to the "vagaries of geopolitics" and urged the OPEC countries to commit towards ensuring more sustainable prices.

Opec sources also said Iran had demanded that USA sanctions be mentioned in the group's post-meeting communique, as Tehran has blamed US measures for the recent rise in oil prices.

Gulf producers usually aligned with Saudi Arabia - the UAE, Kuwait, Oman and Bahrain - have also cautioned against a large output increase and signalled they have been rattled by Riyadh's close coordination with Russian Federation, sources have said.