De-facto OPEC leader Saudi Arabia is pushing for the 14-member oil cartel to increase crude production by 1 million barrels per day (bpd) this week.
Saudi Arabia’s Energy Minister Khalid al-Falih said Thursday that as the world is likely to face a large oil supply deficit in the second half of 2018, a substantial production increase from OPEC would be required to prevent a market squeeze.
Speaking in Vienna, Austria on Thursday, al-Falih said: “We will release supply… One million (bpd) sounds like a good target to work with.”
Industry sources familiar with the oil cartel’s deliberations said that because some OPEC members would be unable to sufficiently ramp up crude production, the actual increase to output is likely to total around two-thirds of Saudi Arabia’s somewhat lofty target. That would mean a supply increase of somewhere between 600,000 bpd to 800,000 bpd.
“One million. He just threw down the gauntlet,” RBC’s global head of commodity strategy, Helima Croft, told CNBC on Thursday.
“(The) White House will be pleased… but barrel constrained OPEC producers will probably not be pleased,” she added.
Energy ministers are gathering in Austria this week to determine the future of OPEC’s 18-month-old agreement with Russia and other producers to limit oil output. The strategy has cleared a global supply overhang, but with oil prices recently soaring to multi-year highs, energy ministers are trying to reach a consensus on easing the output cap to prevent the market from overheating.
— CNBC’s Tom DiChristopher contributed to this report.
