Vienna: OPEC agreed on Friday to raise oil production by around 1 million barrels per day from July for the group and its allies, an OPEC source said.
The output gain is nominal. The real increase will be smaller because several countries that recently underproduced oil will struggle to return to full quotas while other producers will not be allowed to fill the gap, OPEC sources have said.
The deal looked to be in line with many analysts’ forecasts.
Oil prices rose as much as 2 percent on Friday as OPEC neared a deal to increase output to compensate for losses in production at a time of rising global demand.
Benchmark Brent crude jumped $1.68 a barrel, or 2.3 percent, to a high of $74.73 before slipping to around $74.30 by 1215 GMT. US light crude was $1.00 higher at $66.54.
Analysts had expected OPEC to announce an increase in production of 500,000 to 600,000 barrels per day (bpd), which would help ease tightness in the oil market but would not create a glut.
Oil prices have been on a roller-coaster ride over the last few years, with the international marker, Brent, trading above $100 a barrel for several years until 2014, dropping to almost $26 in 2016 and then recovering to over $80 last month.
The most recent price rally followed an OPEC decision to restrict supply in an effort to drain global inventories. The group started withholding supply in 2017 and this year, amid strong demand, the market tightened significantly, triggering calls by consumers for higher supply.
Falling production in Venezuela and Libya, as well as the risk of lower output from Iran as a result of US sanctions, have all increased market worries of a supply shortage.
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Updated Date: Jun 22, 2018 18:36:29 IST