ST PETERSBURG/DUBAI--Saudi Arabia and Russia are discussing raising OPEC and non-OPEC oil production by some 1 million barrels a day, sources said, while OPEC's chief said a complaint from U.S. President Donald Trump over high prices had triggered the idea of upping output.
Riyadh and Moscow are prepared to ease output cuts to calm consumer worries about supply adequacy, their energy ministers said on Friday. Saudi Arabia's Khalid al-Falih and Russia's Alexander Novak both said any such move would be gradual.
Raising production would ease 17 months of strict supply curbs amid concerns that a price rally has gone too far, with oil having hit its highest since late 2014 at $80.50 a barrel this month.
OPEC began a discussion about easing production cuts following a critical tweet from Trump, OPEC's Secretary-General Mohammad Barkindo said. Trump tweeted last month that OPEC had "artificially" boosted oil prices. "We pride ourselves as friends of the United States," Barkindo told a panel with the Saudi and Russian energy ministers in St. Petersburg at Russia's main economic forum.
The Organization of the Petroleum Exporting Countries and allies led by Russia have agreed to curb output by about 1.8 million barrels per day (bpd) through 2018 to reduce global stocks, but the inventory overhang is now near OPEC's target. In April, pact participants cut production by 52 percent more than required, with falling output from crisis-hit Venezuela helping OPEC deliver a bigger reduction than intended.
Sources familiar with the matter said a rise of about 1 million bpd would mean compliance would be at about 100 percent of the agreed level, rather than exceed it.
Barkindo also said it was not unusual for the United States to put pressure on OPEC as some U.S. energy secretaries had asked the producer group to help lower prices in the past. Oil prices fell more than 3 percent towards $76 a barrel on Friday as Saudi Arabia and Russia said they were ready to ease supply curbs.
Russian Energy Minister Alexander Novak said current cuts were in reality 2.7 million bpd due to a drop in Venezuelan production - somewhere around 1 million bpd higher than the initially agreed reductions. Novak did not say whether OPEC and Russia would decide to boost output by 1 million bpd at their June meeting. But he said an agreement of a gradual easing was the likely outcome.
"Different options will be put forward. But, it is likely that this will be a gradual easing," Novak said in comments published on the Russian energy ministry website.
