India, China in talks to form bloc against Opec

Eileen GuzmanJun 14, 2018

US ally Saudi Arabia remains OPEC's most powerful member - with enough production capacity to manipulate global supplies.

Oil prices dropped on Wednesday as a result of increased supplies in the U.S.

While there are risks that could influence this estimate, including possibly higher prices, trade disruptions and a potential further strengthening of the United States dollar, the IEA said some governments are already considering measures to ease price pressures on consumers.

Just nine days before a big OPEC meeting, US President Donald Trump joined the oil-market fray Tuesday, blaming the group for high prices.

This could lead to a supply gap in crude late next year if OPEC can't make up for lost production, the IEA said in its monthly report Wednesday. On a weekly basis, the U.S.is already producing at a record-high. Using drilling advances such as fracking, operators in Texas and North Dakota have pushed USA production higher.

With output in Russian Federation rising back above 11 million bpd in June and Saudi production climbing to more than 10 million bpd, supplies from all three top producers are increasing.

But the Paris-based IEA, echoing statements from oil producers as well as analyst comment in recent weeks, said there may be a change to the so-called Vienna agreement.

"Saudi Arabia and Russian Federation have already started to lift production", he said. The kingdom reported that it increased production in May to about 10 million barrels a day. "Not good!" Trump wrote in a post on Twitter on Wednesday after last raising the issue in April. The U.S. has lobbied Saudi Arabia and other members, arguing they need to raise output by 1 million barrels a day to keep prices in check, people told Bloomberg News earlier this month. The House Judiciary Committee approved a bill Wednesday to subject OPEC to US antitrust law by removing state immunity shields. The measure now goes to the full House.

Earlier in the session, Brent and US crude had retreated on concerns about rising production in the United States and expectations that OPEC and other producers could relax voluntary output cuts.

The talks come within less than two months of oil minister Dharmendra Pradhan proposing an alliance between Indian and Chinese staterun oil companies for a greater say in the market.

Oil pumpjacks are seen in Lagunillas, Venezuela May 24, 2018. Schumer spoke as he stood in front of the price sign - regular for $3.09 - at an Exxon station on Capitol Hill.

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