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High oil prices hurting fiscal balance, says Pradhan

High oil prices hurting fiscal balance, says Pradhan

Any production increase would help offset a decline in output by Venezuela, an OPEC member consumed by economic and political crisis, and the prospect of reduced exports from Iran - OPEC's third-biggest producer - now that the in the process of re-imposing sanctions over that country's nuclear program.

Questions remain, however, over the ability of some OPEC nations - Iran and Venezuela in particular - to increase production as they struggle with domestic turmoil and sanctions.

"The market is going to say, 'That isn't enough, ' and 'How quickly is it going to come online?' That's when we're really going to resume the price increases", Flynn said.

Khalid Al Falih, Saudi Arabia's energy minister.

Saudi minister said there is broad support for the proposal to raise crude output by one million barrels a day, according to the Wall Street Journal, however, Iran is reportedly playing a hardball. The credibility of the revitalized organization and the legitimacy of its alliance with non-OPEC producers, and its promises to bring price stability to the market, are on the line. "More oil on the market means relatively lower prices for consumers". There are different views on how much to increase production and whether such a move should be gradual, one source said following a meeting of Gulf oil ministers on Tuesday evening.

OPEC's spare production capacity has shrunk to less than 2 million barrels per day (bpd) and is expected to fall to less than 1 million bpd by the end of 2019.

The production increase will partly undo a 1.2 million barrel cut OPEC agreed on in late 2016 that has helped push up the price of oil.

Prospects for a deal to boost oil production from OPEC and its partners dimmed sharply Thursday, potentially worsening divisions within the oil group.

Benchmark Brent crude dropped $1.76 a barrel, or 2.3 percent, to a low of $72.98 before recovering a little to $73.54, down $1.20, by 1215 GMT.

Ultimately, Saudi Arabia persuaded Iran to cooperate with the plan to cut output, following calls from major consumers to curb rising fuel costs.

But on Friday, Saudi Arabia's energy minister Khalid al-Falih persuaded Mr Zanganeh to accept the proposal Riyadh and non-OPEC member Russian Federation had been championing.

So far there is no indication that Iran and the other members would agree to such a reallocation, although with officials holding extensive talks in the run-up to Friday's Opec meeting, further compromise could be made.

In 2006-2008 and again in 2011-2014, surging oil prices resulted in a sharp slowdown in consumption growth in the advanced economies, though at the time many analysts dismissed signs of a slowdown.

Zanganeh has said that if OPEC returned to regular compliance, the group would raise output by around 460,000 bpd.

He said the exact mechanics of how the proposal should be carried out will be decided among OPEC members at their meeting on June 22.

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