Oil prices heading for a sell off in coming days – with OPEC and Russia due to meet this Friday and Saturday.
Some relaxation is expected in the 1.9 million barrels a day production cap OPEC and Russia have been supporting now since the start of last year.
But while talk has it that Saudi Arabia wants the cap to be lifted by a million barrels a day, other OPEC members like Iran don’t want a cut.
Damage to Libya’s oil storage and export facilities has cut production by several hundred thousand barrels a day (until the repairs are completed in the next few weeks).
But this week Russia revealed that it is looking at a cut of 1.5 million barrels (b/d0 a day which would all but negate the existing cap.
Russian energy minister Alexander Novak revealed the size of the prospective cut on Tuesday.
Analysts say although Saudi Arabia is willing to add one million barrels a day to global output, Russia’s 1.5m b/d figure is much higher than has previously been discussed and would likely face backlash from rival producers (Iran and Venezuela for example have been vocal on this issue, as has Algeria).
Reuters reported last night that Gulf oil producers did not agree on the need for any change to the production cap in talks on Tuesday night.
The price of US marker crude (West Texas Intermediate) was around $US65 a barrel, down 9% so far in June on the speculation about the coming OPEC meeting and a rise in output.
