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Decision to raise crude output unlikely on June 22: Azlin Ahmad, Argus Media

In June 22 meeting, OPEC will have initial discussions and p..

In June 22 meeting, OPEC will have initial discussions and probably decide how they could measure the extent of the reduction in output cut agreement, Azlin Ahmad, Editor-crude oil, Argus Media, tells ET Now.

Edited excerpts:
The Saudis, Kuwait and UAE are planning a Saturday meeting on OPEC before the June 22 meeting in Vienna. We are talking about a world where oil supply looks to be more and more restrained whether it is from Iran or Venezuela. Do you believe there may be some minor tweaks and adjustments made to supply in todays meeting by Saudi or Russia?

Today we are not going to see any major changes or adjustments but the June 22 meeting is going to be very significant because that potentially is where they may discuss some loosening of the output cut. June 22 is the meeting to watch for in terms of any changes in the OPEC and non-OPEC agreement.

Another topic that could be discussed at the OPEC meeting either today or on 22nd is that Iran has sought more support from other countries against the sanctions imposed by the US. Do you think they will be able to garner support?

Iran wants to have support from within the OPEC against the sanctions but indications are there that Iran has said that when the sanctions are over, they plan to just not be limited by any OPEC agreement and they would just increase production as much as they can. It is all very premature because the sanctions, in theory, have not actually been fully implemented. So, we have to realise that if Iran is forced to reduce its crude exports because to comply with the US sanctions, then Saudi Arabia will have to step in and increase production. So, there is going to be a little bit of a conflict.

Since, production cut by Iran is going to benefit Saudi Arabia and Russia, it might be difficult for Iran to get support from OPEC. This will create conflict of interest.

Come 22nd June, what are you expecting? There is going to be either a reduction in output curbs or may be an elimination of output curbs. What is your own expectation?

The Russian and the Saudi oil ministers have been very casual about the whole thing. They have not outlined any plans but for the June 22 meeting, I do not think it is going to be that significant to abandon the whole output cut agreement.

They would probably discuss about potentially reducing the output cut volume to an extent that some of the producers could increase production. I think that in June 22 there will be initial discussions and probably to some extent how they could measure the extent of the reduction in output cut agreement. I do not expect them to totally abandon it. It is going to be a slow process. It looks like they will have to think about starting to increase production a little bit, especially for major producers which is Saudi Arabia and Russia.

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