OPEC agrees to increase oil production


However, operators in the Permian Basin of Texas face a shortage of pipeline capacity, "trapping a fair amount of oil and limiting the availability of that shale increase", said Jim Rittersbusch, a consultant to oil traders.

By avoiding setting individual country targets, the deal appears to give Saudi Arabia the leeway to produce more than its official OPEC target and fill the gap left by those like Venezuela who can not pump enough to meet their official allocation.

The committee meeting was the last consultation before the OPEC gathering on Friday.

Some analysts believe that Saudi Arabia needs a Brent price closer to $90 to cover its domestic spending but is feeling pressure from the United States to head off rising prices by boosting output.

After a day of diplomatic back-and-forth, ministers were increasingly positive on Thursday that a deal was in reach. "This is a very good meeting".

Iranian Oil Minister Bijan Zanganeh said on Thursday he still believes OPEC can not reach a compromise decision on raising oil output at its meeting the following day.

UAE's Energy Minister Suhail Mohamed Al Mazrouei arrives for the Opec meeting in Vienna.

The institution agreed production caps in November 2016 targeting 32.5m barrels per day following a crash in global oil prices.

- That means if a 1 million bpd output rise were agreed, OPEC would be allowed to increase output by around 650,000 bpd, of which Saudi Arabia could contribute over 200,000 bpd.

OPEC and its allies have since a year ago been participating in a pact to cut output by 1.8 million bpd.

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Ministers have gathered in the Austrian capital to discuss a supply increase that would be equivalent to about 600,000 barrels a day, or 0.5 per cent of global supply.

A production rise of about 1 million barrels per day or around 1% of global supply was emerging as a consensus for the group and its allies, Opec sources told Reuters, adding that Iran could agree under certain conditions.

The convoluted plan shows the difficulty Saudi Arabia has in bridging the gap between the competing interests of different members.

Venezuela, in the throes of an economic crisis, is also opposed to easing the cartel's output curbs, as are several other countries, including Iraq and Nigeria, who would struggle to immediately increase production.

Mr Zanganeh was due to attend a ministerial committee on Thursday, two sources said.

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

Still, Zanganeh told reporters that he was willing to have further discussions about production numbers on Thursday, when he will join a meeting of countries - including Russian Federation and Saudi Arabia - that oversee implementation of the production cuts.

The Organisation of the Petroleum Exporting Countries met in Vienna in an effort to cool the market after oil prices rose to $80 a barrel.

"Consumers are asking for more supply in the second half", said Saudi Arabia's Al-Falih.