VIENNA: Organisation of the Petroleum Exporting Countries (Opec) energy ministers expressed optimism today they were nearing a compromise on oil output policy, with Saudi Arabia acknowledging that a big production increase would be "politically unacceptable" to arch foe Iran.
Opec and non-Opec partner countries are due to hold crunch talks here today and tomorrow to decide the fate of an 18-month-old supply-cut pact that has cleared a global oil glut and lifted crude prices to multi-year highs.
Saudi Arabia, backed by non-member Russia, is now racing to convince the alliance to raise production again in order to meet growing demand in the second half of 2018.
Adding an extra one million barrels per day to the market "sounds like a good target to work with", Saudi Energy Minister Khalid al-Falih said at a seminar organised by Opec.
Regional rival Iran however is fiercely opposed to unwinding the agreed production curbs, as its oil industry is bracing for fresh sanctions following US President Donald Trump's decision to quit the international nuclear pact.
Several other Opec members, including Venezuela and Iraq, are also against major changes to the pact as they are unable to immediately boost production.
Signalling that positions might be softening, Saudi's Falih acknowledged that "not every country can respond to an allocation of higher production" and said it was important to be "sensitive" to those concerns.
Allowing countries like dominant player Saudi Arabia to make up for the shortfalls of other members "may be a technical solution but it may not be politically acceptable to others", he said at the Vienna seminar.
As the clock ticks down to the upcoming ministerial meetings, a face-saving compromise appeared to be in the works.
"We hope that there will be an agreement," Iraqi Oil Minister Jabbar al-Luaibi told reporters. "Iraq is trying very hard to narrow the gap between the two blocs."
UAE Energy Minister Suhail Mohammed al-Mazrouei added: "I am very optimistic."
Observers say the participating countries could simply agree to stop exceeding their quotas for cutbacks, and stick to the agreed target of trimming production by 1.8 million barrels per day (bpd).
The 24 nations in the pact, known as Opec+, are currently keeping more than two million bpd off the market.
Most of the shortfall has come from Venezuela, where an economic crisis has savaged the country's petroleum production. Output has also plummeted in Libya, where fighting between rival factions has damaged key oil infrastructure.
In London, oil prices fell today as crude exporters in Opec appeared to be nearing a deal to increase production.
Benchmark Brent crude dropped US$1.80 a barrel, or 2.4%, to a low of US$72.94 before recovering a little to US$73.30 (RM293), down US$1.44, by 1358 GMT. US light crude was 71 cents lower at US$65.00 (RM260).
Brent reached a 3½-year high above US$80 a barrel last month but has fallen steadily in recent weeks as Saudi Arabia, de facto leader of Opec, has signalled it intends to raise production to stabilise prices.
Harry Tchilinguirian, head of oil strategy at French bank BNP Paribas, told Reuters Global Oil Forum he expected Opec and Russia to agree a compromise that would see a small increase in global oil production.