OPEC agrees nominal 1.0m b/d increase in output

The Organisation of Petroleum Exporting Countries and Russia have agreed on a 1.0m barrel a day increase in their combined level of output following a last-minute compromise with those producers that were opposed to a deal.

However, due to the inability of several member countries to increase their output, in reality the agreement equated to around a 600,000 b/d boost, according to reports citing one of the delegates present.

In 2016, OPEC had originally agreed a 1.6m b/d reduction in its output, which was later boosted to 2.2m b/d thanks to contributions from non-OPEC members.

Also impacting on the group's output were involuntary declines in the rates of production in countries including Mexico and Venezuela, be it due to natural declines in some of their older fields, lack of investment or mismanagement or both.

Iranian output was also likely to soon be negatively impacted by US sanctions.

At one point during the negotiations on Thursday evening, Iran's head of energy had reportedly left the meeting, angered by the proposals put forward by Saudi and having threatened to block Riyadh's plans.

Also discussed on Thursday was the creation of a larger bloc of producer nations which would include Russia and nine other nations, on top of OPEC's 14 current members.

Commenting on the results of the meeting, analysts at Barclays Research said that if Iran, Venezuela, Libya and Nigeria were excluded then the net increase resulting from the deal might reach as high as 770,000 barrels a day.

"Based on our previously published balance, we expect OPEC crude output to increase by about 700 kb/d by the end of the year, assuming Libya’s oil output can rebound to 900 kb/d," Barclays Research added.

"This agreement is consistent with those expectations, though we see a slight upside risk in Saudi, UAE, and Kuwaiti output expectations compared with our balance."

As of 1500 BST, front month Brent crude oil futures were tacking on 2.01% to $74.60 a barrel on the ICE.