OPEC agrees to increase oil production

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The 24 nations in the pact, known as OPEC+, initially agreed to trim production by 1.8 million barrels a day but they have actually been keeping more than two million bpd off the market.

Influential producers such as Saudi Arabia and non-OPEC member Russian Federation are pushing for output hikes, while countries with little ability to pump more - including Iran, Iraq and Venezuela - are lobbying against any change in current policy.

But renewed Iranian sanctions and the continued drop in Venezuela's output has convinced some OPEC members that producers must start easing production caps.

OPEC sources have said that if a 1 million bpd output hike were approved, Saudi Arabia would add about 0.25-0.3 million bpd to supply.

"We're hoping to come out of this with a reasonable decision", Saudi Energy Minister Khalid al-Falih told reporters moments before the OPEC meeting opened.

Zanganeh said he would leave Vienna on Friday even before OPEC holds talks with non-OPEC producers the next day, but efforts were underway on Wednesday to convince Iran to participate in a deal. Oil was trading as low as $27 in 2016.

But unexpected outages in Venezuela, Libya and Angola have effectively brought supply cuts to around 2.8 million bpd in recent months. No nation should be allowed to boost output in order to take market share away from another member. Countries with a lack of spare capacity, including Iran, Iraq and Venezuela, are resistant. The US West Texas Intermediate (WTI) crude priced US$66.49 per barrel, up 1.5 per cent from the last close, said the source.

Falih said the world could face a supply deficit of up to 1.8 million bpd in the second half of 2018 and that OPEC's responsibility was to address consumers' worries.

Falih said the oil market had now rebalanced and his aim was to prevent a shortage of crude in future that could squeeze the market.

Current restrictions were due to be in place until the end of 2018 but most commentators expect the meeting will result in some degree of production increase.

"As a group we can meet the 100 percent compliance".

Iran's oil minister walked out of a key meeting with OPEC peers on Thursday, as a rift deepened with regional rival Saudi over its push to ramp up the cartel's oil output.

"Both Saudi and Iran can show that they won", an OPEC delegate said.

After sitting down with several counterparts, Iranian Minister Bijan Namdar Zanganeh said he was optimistic about the outcome of the OPEC meeting, a marked contrast to comments on Tuesday when he said a deal was unlikely. In September, we will review the situation in the market and decide the future course, ' he said.

The uncertainty heading into today's OPEC meeting has kept numerous major hedge funds on the sidelines for weeks because even with their resources, they have been unwilling to place bets on either side of the market, given the volatility usually associated with an OPEC meeting.