(Bloomberg) -- OPEC and its allies could boost oil production by more than the 1 million barrels a day agreed last month if needed, Russia’s Energy Minister Alexander Novak said.
“I can’t rule out that if there is a need for more than 1 million barrels we will be able to quickly discuss it all together and make all necessary decisions,” Novak told reporters in Moscow on Friday. The producers have “all needed tools,” if necessary, he said.
Oil prices have remained near their highest in more than three years despite pledges by Russia, Saudi Arabia and their allies last month to boost production. Supplies are being strained by deepening losses in Venezuela, erratic flows from Libya and the prospect of renewed U.S. sanctions on Iran which could curb its exports.
Novak didn’t comment on whether he discussed in detail the option of raising supply by more than the agreed amount with his Saudi Arabian counterpart Khalid Al-Falih during their phone conversation earlier this month.
“If there is a need, we can always contact other countries” to discuss the possibility of increasing further, Novak said. “We discussed this as an option -- this communication -- but as to the need of any decision now, it’s too early to talk about it.”
Questions on which countries will increase supply and by how much remain contentious topics in the coalition of producers often referred to as OPEC+.
Iran, facing the loss of customers scared off by U.S. penalties, disputes that the Organization of Petroleum Exporting Countries agreed to any significant output increases at its meeting in June. Output limits assigned in late 2016 still apply, and any country that exceeds these is betraying the organization, it has said.
“Minister Novak is wrong -- there was no agreement to produce an additional 1 million barrels a day last month in Vienna,” said Iran’s OPEC governor Hossein Kazempour Ardebili. Countries which had cut output more than pledged in the 2016 agreement are allowed to return to 100 percent compliance and “anybody who does anything beyond the resolution would be in breach of the agreement, and will be responsible for the consequences,” he said.
Novak said that last month’s OPEC+ decision allows any member with the capacity to boost output to do so. It doesn’t limit them to increasing in proportion to the cuts agreed in 2016. Questions on tensions in the group because of the supply allocations are “fantasies,” he said.
Russia, which pledged to raise its oil production by 200,000 barrels a day, has been quick out of the blocks. The country has so far in July added back nearly 80 percent of the 300,000 barrels it cut earlier, Novak said. It would still be fully in line with the OPEC+ decision by the end of this month, he said.
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