OPEC braces for tough Vienna talks on hiking oil output

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Due to the staunch opposition to any production increase from the faction led by Iran and Venezuela, analysts expect this week's OPEC meeting to be a very hard one, comparing it to the 2011 meeting, which the then Saudi Oil Minister Ali al-Naimi described as "the worst OPEC meeting of all time", Commerzbank commodities analyst Carsten Fritsch told Reuters.

USA shale producers can step up to meet any supply deficit, but Roberts and Phil Flynn, senior energy analyst at the Price Futures Group, said it takes time for them to increase output because of the nature of shale mining.

The need to increase production emerged as Venezuela's production is in free fall and Iranian production is threatened by the re-imposition of USA sanctions.

"We look forward to having this gathering with OPEC and non-OPEC".

WTI turned positive after energy information provider Genscape said crude inventories at the Cushing, Oklahoma hub were expected to have dropped by 2.3 million barrels in the week since Tuesday, traders said.

China retaliated by imposing import duties on USA products, and suggesting that crude oil tariffs were planned.

The market was expecting an increase of around 1-1.5 million barrels.

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OPEC officials are also working on putting the cooperation between the cartel, Russian Federation and other oil producers - the so-called OPEC+ group now comprising 24 nations - on a permanent footing.

In the meantime, the storage capacity at Ras Lanuf port had been cut by 4,00,000 barrels after a second crude oil tank was set on fire amid fighting between rival factions for control of two key export terminals in Libya. Moscow and Riyadh have made it clear they are in favor of a return to higher production to keep a lid on prices but other OPEC members, notably Iraq and Iran, are against it. The U.S. president repeatedly voiced his dissatisfaction with OPEC through social media accusing the cartel of driving up the oil prices, this consequently caused some turbulence in the market and resulted in Saudi Arabia's reaction.

Iran, the world's third largest crude producer, has reportedly said that Venezuela and Iraq will join it in blocking a Saudi/Russia proposal to raise oil production.

Ultimately, Hewson says, the 14 countries in the Organization of the Petroleum Exporting Countries are likely to agree on a production increase.

China on Saturday threatened an additional 25% tariff on $50 billion worth of U.S. goods, including energy and agricultural products, in response to President Donald Trump's decision to place similar tariffs on the same annual value of Chinese product imports. Saudi Arabia has been discussing different scenarios that would raise production by between 500,000 and 1 million barrels a day, according to people familiar with the matter.

Both countries would struggle to increase output. Saudi Arabia's own data for May showed it increased its own output by 161,400 barrels a day. The outcome is far from certain, however, with some key OPEC members said to be resistant to supply increases.

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