OPEC, Russia said to begin talks to raise oil output

Saudi Arabia and Russia are discussing to raise OPEC and non-OPEC oil production by some one million barrels a day, Reuters reported, citing sources.

The proposed output increase talks come after US President Donald Trump complained about artificially high prices last week.

Riyadh and Moscow are prepared to ease output cuts to calm consumer worries about supply adequacy, Saudi and Russian energy ministers said on Friday.

Saudi energy minister Khalid Al-Falih said that any such move would be gradual so as not to shock the market.

The OPEC and allies led by Russia agreed to curb output by about 1.8 million barrels per day (bpd) through 2018 to reduce global stocks, but the inventory overhang is now near OPEC’s target.

Raising production would ease 17 months of strict supply curbs amid concerns that a price rally has gone too far, with oil having hit its highest since late 2014 at $80.50 a barrel this month.

Sources familiar with the matter told Reuters that an increase of about 1 million bpd would lower compliance to 100 percent of the agreed level.

Meanwhile, Russian energy minister Alexander Novak said current cuts were in reality 2.7 million bpd due to a drop in Venezuelan production - somewhere around 1 million bpd higher than the initially agreed reductions.

He declined to say on whether OPEC and Russia would decide to boost output by 1 million bpd at their next meeting in June.

“The moment is coming when we should consider assessing ways to exit the deal very seriously and gradually ease quotas on output cuts,” Novak said in televised comments.

Initial talks are being led by the energy ministers of Saudi Arabia and Russia at St. Petersburg this week along with their counterpart from the United Arab Emirates, which holds the OPEC presidency this year, the sources said.

OPEC and non-OPEC ministers meet in Vienna on June 22-23, and the final decision will be taken there.