Oil falls as OPEC nears deal to raise production

High oil prices hurting fiscal balance, says Pradhan

Ministers from the Organization of the Petroleum Exporting Countries are meeting Friday in Vienna for what could be a hard gathering.

If all Opec members produced as much as they were allowed under the deal, Opec output would in theory rise by about 740,000 barrels per day, based on Reuters estimates of the group's production in May.

Saudi Oil Minister Khalid al-Falih said Friday that an OPEC committee ahead of the official meeting had agreed "to recommend releasing the equivalent of 1 million barrels or thereabout to the market".

"It wasn't a good meeting", Iranian Oil Minister Bijan Namdar Zanganeh told reporters.

Phillip Futures, another brokerage, said in a note that it expected "an approximate 300,000-600,000 barrels per day (bpd) hike by Saudi Arabia and Russian Federation collectively".

"While we are not in favour of prices as low as $30 per barrel, we also do not support the prevailing high price which dent our fiscal balance and undermine our development process", Mr. Pradhan added.

But it remains to be seen what kind of compromise could emerge, given Iran's deep aversion to any attempt by OPEC allies to offset its expected production losses as a result of the impending United States sanctions.

Some OPEC members have been opposed to a production increase, and others don't want to go as far as Saudi Arabia.

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Fawibe said: "If OPEC increases its production by 1.5million barrels per day, there will be a slump in the price, especially now that we are going to winter."He urged the federal government to proactively address the situation in the oil-producing region to enable the country to boost production, which stood around 2.25 million b/d earlier this year".

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading higher shortly before the regular session opening on Friday. "We have a valid deal", Iran's Opec governor Hossein Kazempour Ardebili said, responding to a question whether the agreement would be adjusted on Friday.

So far there is no indication that Iran and the other members would agree to such a reallocation, although with officials holding extensive talks in the run-up to Friday's Opec meeting, further compromise could be made.

"There is a lot more at stake than just ticking a box and say: 'we got this out of the way", the minister said, nothing that "timing isn't critical for the government of Saudi Arabia". If we lose a million bpd of output from Venezuela and Iran in the fourth quarter, where will all these barrels come from? He said the meeting would tackle over-compliance with oil output cuts and that Iran was "very cooperative".

EUR: Eurozone PMI data for June had been generally mixed with the service reading rising to a 4-month high at 55, above forecasts, while manufacturing remained stagnant at an 18-month low of 55, which was in line with expectations as increased trade war tariff tensions continued to weigh on the manufacturing sentiment.

That would effectively mean a modest boost from producers such as Saudi Arabia that has been cutting more deeply than planned despite production outages in Venezuela and Libya.

Oil prices surged almost 75 percent, touching $80 a barrel, after OPEC and allies agreed to cut production in late 2016.

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