OPEC ministers and their allied partners meeting in Vienna have agreed on oil production levels starting from July.
Sources confirmed to CNBC that a deal has been struck, and the group will aim to restore about 1 million barrels per day (bpd) to the market. However, industry sources familiar with the oil cartel’s deliberations said the actual increase is likely to total around two-thirds of Saudi Arabia’s target.
That’s because some OPEC members would be unable to sufficiently ramp up crude production. Analysts say supply increases are more likely to fall in a range between 600,000 to 800,000 bpd.
OPEC is not expected to actually release a hard target, but the figures align with comments from ministers that the group will strive to stop overshooting its 18-month-old deal to keep 1.8 million bpd off the market. Output among the 24 nations has actually fallen by about 2.8 million bpd, due largely to cratering production in Venezuela and supply disruptions elsewhere.
The market is awaiting a press conference with oil ministers for more details on the agreement.
Saudi Energy Minister Khalid al-Falih said Friday morning that no-one should expect to see an “immediate flood” of oil coming back onto the market following the meeting.
He also warned the world could face a supply deficit of 1.8 million bpd in the second half of 2018 and that it was OPEC’s responsibility to alleviate consumers’ concerns.
OPEC’s agreement with Russia and other producers to limit oil output has helped to clear a global supply overhang that weighed on prices for years. But with crude futures recently soaring to multi-year highs on strong demand, dwindling output from Venezuela and renewed U.S. sanctions on Iran, energy ministers are worried about the market overheating.