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Saudi Arabia and Russia to boost oil output 'by 1 million barrels per day'

Oil prices are set to reach pre-2014 highs [Getty]

Date of publication: 25 May, 2018

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An angry tweet from President Donald Trump about high oil prices - along with uncertainties over Iran and Venezuela's oil supply - have triggered OPEC and others to boost production.
Russia and Saudi Arabia said on Friday they believe a deal is possible to gradually boost oil output as soon as July, as world oil prices hit highs not seen since 2014.

The two oil-rich countries are the key movers behind a pact between OPEC and other producers that has limited production since 2017, but which experts fear may soon lead to a spike in prices.

OPEC's chief also said US President Trump had complained on Twitter about high oil prices, which had triggered to the countries' decision to increase output.

Saudi Oil Minister Khalid al-Falih said at an economic conference in Russia that a gradual output increase could happen in the second half of the year to prevent any supply shocks, according to the RIA Novosti agency.

His Russian counterpart Alexander Novak said they had discussed whether they need to ease production limits.

"If we come to a common opinion that it is necessary" to increase supply it "should probably take place from the third quarter", Novak said, according to RIA Novosti.

He added that ministers from OPEC and the other members of the production pact would discuss by how much to increase production next month.

Read more: An energy and geopolitical earthquake: The Saudi-Russian long-term oil deal

"It is too early to discuss now a concrete figure," said Novak.

Following their comments the price of crude oil slumped by 2 percent on international markets.

OPEC and ten other oil producers agreed at the end of 2016 to cut output by 1.8 million barrels per day to clear a glut that had led to a collapse in prices in 2014.

The deal, which has been extended until the end of 2018, has led to that glut disappearing and prices have recovered from around $30 per barrel to around $80.

OPEC began discussing an ease of production restrictions following a critical tweet from Trump, according to the cartel's Secretary-General Mohammed Barkindo. Trump tweeted last month that OPEC had "artificially" pushed up oil prices.

"We pride ourselves as friends of the United States," Barkindo told Saudi and Russian energy ministers during a panel at Russia's main economic forum in St. Petersburg.

Uncertainties about supplies from Iran and Venezuela have led prices to spike higher in recent weeks, with industry players warning they could jump to $100 per barrel, the first time since 2014.

Agencies contributed to this report.

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