Iran, the world's third largest crude producer, has reportedly said that Venezuela and Iraq will join it in blocking a Saudi/Russia proposal to raise oil production. Energy Ministers from all the OPEC countries including Saudi Arabia, UAE, Iran as well as Russia, China, Oman are expected to participate in the Conference.Pradhan will also visit Germany from 21-22nd June, 2018.
Oil prices fell on Tuesday on expectations that producer cartel OPEC and key ally Russian Federation will gradually increase output after withholding supplies since 2017.
The move would effectively wipe out existing production cuts of 1.8 million bpd, which have helped rebalance the market in the past 18 months and lifted oil prices to almost $80 per barrel from as low as $27 in 2016. EIA expects oil demand to grow by 1.4 million barrels/day and non-OPEC supply will grow by 2 million barrels/day. There is speculation that OPEC might undo a deal struck early previous year to limit crude production.
Since OPEC operates on the principle of unanimity, analysts expect some sort of compromise agreement to be thrashed out by Saturday.
Meanwhile, Russia plans to propose the OPEC/non-OPEC allies next week that they reverse the group's production to the October 2016 levels - the baseline for the cuts of most pact participants when they had pumped as much oil as they could to blunt the cuts' impact later is putting pressure on crude oil prices. "This could make a huge dent in the USA bid to export oil", he added.
A cut in Chinese purchases of United States oil may also benefit Iran's sales, which Washington is trying to curb with new sanctions it announced in May.
Dollar and stocks drop as Trump hits China with tariffs
US crude fell 0.3 percent to $66.44 per barrel and Brent was last at $75.95, down 1.03 percent on the day. Tokyo ended 0.5 percent higher and Sydney added more than one percent.
"We were actually preparing to raise imports according to an earlier government line", he added, referring to a Beijing policy enacted earlier this year to help reduce the United States trade deficit with China. China said it would impose tariffs on a variety of U.S. goods, including crude and gasoline, in response to President Donald Trump's $50 billion levy on Chinese imports.
Anxious about the impact of gasoline prices on mid-term elections, the Trump administration is lobbying hard for a surge in production.
"There is an element of self-preservation in seeking to do this, as while most oil producers prefer higher prices they will also want to avoid a scenario where prices reach a level where demand drops off sharply, thus triggering a global slowdown, as well as accelerating the push for renewable (energy)", he said.
Resistance is being led by Iran, deeply wary of any move by regional rival Saudi Arabia that could push down oil prices at a time when Tehran faces renewed sanctions following US President Donald Trump's decision to quit its worldwide nuclear deal, which is likely to send the country's oil exports plummeting. Total volume traded was about 11 per cent below the 100-day average.
There are expectations for the oil cartel to consider altering a production deal that has held back 1.8 million bpd from the market for the past 18 months. After yearlong rise in oil and gasoline price, there's a call to control Oil price from rising too far and too fast.