OPEC agrees modest hike in oil supply after Saudi and Iran compromise

Energy ministers are gathering in Austria to determine the future of global oil output.

Khalid Al Falih, Saudi Arabia's energy minister.

OPEC sources also said Iran had demanded that U.S. sanctions be mentioned in the group's post-meeting communique.

The upbeat Saudi comments contrasted with the somber tone from the Iranian delegation.

"Iran rejected a potential compromise, saying it won't support even a small increase in oil production".

OPEC will meet again on Saturday with non-members, including Russian Federation, to ratify Friday's agreement.

Officials from major oil-producing nations are expected to agree this week to boost output, but just how much they will open the spigot - and the effect on oil prices - remain wild cards.

The cartel has overcome opposition from Iran and will raise output by one million barrels per day.

A potential tariff would also limit the revenues of United States oil exporters and force them to accept even steeper discounts to find new buyers of their oil to replace the sales in their second-largest single oil export market after Canada, analysts warn. Iran faces constraints on its oil exports after Trump reimposed sanctions on May 8. Venezuela's oil industry is collapsing due to years of mismanagement and an economic crisis.

Falih said that recent production outages in Venezuela, Libya, and Angola have already reduced global supplies by about 1 million barrels a day. On Wednesday, U.S. crude closed at $65.74 a barrel, down from a peak of almost $73 last month, and Brent crude, the global standard, closed at $74.61, down from $80.

The U.S. has reimposed sanctions, but it doesn't want its consumers to pay the price for that at the pump.

WTI crude oil prices ticked higher by 1.4 percent to $65.84/bbl on Wednesday following a drop in USA commercial crude inventories this week, but all eyes will be on Vienna by the end of the week.

Trump's involvement makes it hard for Tehran to accept a compromise. Likewise, the oil for delivery in far-month August traded higher by Rs 6 or 0.13 per cent at Rs 4,489 per barrel in 118 lots. Opec members Iran, Iraq, Venezuela and Algeria have opposed a relaxation of production cuts, fearing a slump in prices. German carmaker Daimler cut its earnings forecast late on Wednesday, saying tariffs on cars sent from the United States to China would hurt Mercedes-Benz auto sales.

While Saudi Arabia's cutting by more than required has helped Opec's compliance, involuntary reductions in Venezuela amid economic crisis and in Angola due to natural decline have had a larger impact and can not be reversed at short notice. Riyadh could also act unilaterally boosting output, as it did in 2011 after a meeting ended in acrimony without a deal.

He acknowledged that a big production hike might be "politically unacceptable" to some OPEC countries and said it was important to be "sensitive" to those concerns.