Oil prices fall as Russian oil minister comments suggest softer output cap

Oil prices fall as Russian oil minister comments suggest softer output cap

Oil prices are down for a third day as comments from Russia’s oil minister tally with previous suggestions that oil output cap limits could be softened at the June OPEC meeting. That fall in prices also comes despite oil outages in Venezuela, Iran and Libya.

By around mid-afternoon Friday, the price of Brent crude oil was down 2.31% at $77.01 per barrel. The price of US WTI oil, meanwhile, slid 2.66% to $66.83 per barrel.

Growing signs of easier OPEC output cap

Following news earlier in the week that some had suggested there could be an easier hand on the current output cap agreement, Russia’s energy minister, Alexander Novak has suggested that the agreement could begin to wind down.

“The moment is coming when we should consider assessing ways to exit the deal very seriously and gradually ease quotas on output cuts,” Novak said, according to Reuters.

Novak has also met with Khalid al-Falih, Saudia Arabia’s energy minister and unofficial leader of OPEC. It’s thought the two likely discussed the situation as the next OPEC meeting in Vienna moves closer.

The output cap has been in place since January 2017 and is currently set to continue until the end of 2018. However, given the deterioration in oil output among some key producers, it’s likely the agreement could end sooner than the current date that’s in place.

Iran issues EU oil demands

Following the beginning of fresh US sanctions on Iran, the oil producing country has issued a number of tough demands of the EU, including that the region will buy all of Iran’s oil.

“Europe must guarantee that Iran’s oil will be completely sold, one of the five demands read. “If the US can damage the sale of our oil, we must be able to sell as much oil as we want. Europeans must guarantee that they compensate for the loss, and that they buy Iran’s oil.”

“Iran will resume halted nuclear activities if Europe fails to provide guarantees,” Ayatollah Khamenei said as the EU, China and Russia work to salvage the Iran nuclear agreement from which US President Trump withdrew.

By Ilona Billington
Ilona is a freelance writer and editor with over 15 years experience reporting and writing about UK and European economics, real estate, financial markets and central banks.

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