OPEC sees 'considerable uncertainty' in global oil market

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But OPEC, Russia and others have said any increase in output would be made gradually.

Nonetheless, many analysts expect OPEC to decide to hike production.

After months of sharp oil price rises there is now considerable uncertainty as to the market's direction for the rest of the year, OPEC said on Tuesday as a key meeting of oil producers looms. But, with Brent prices up by around 180 percent from their 2016 low, global crude inventories falling, Venezuelan production plummeting and imminent sanctions against Iran, the group may soon end their supply cuts.

Saudi Arabia, OPEC's de facto leader, which has indicated its support for hiking output at next week's meeting in Vienna, has said it is alert to the potential squeeze on the market. "The U.S. tried it last time against Iran, but oil prices got to $140 a barrel".

Before the U.S. withdrawal from the Iran nuclear deal, the Saudi position was that the cuts would remain in place until the end of this year, as planned, even if OPEC were to overtighten the market.

Higher oil prices create incentives for energy efficiency and biofuels, but only if the higher prices persist.

He was referring to the infamous 2011 meeting that fell apart over sharp differences in opinion, with Saudi Arabia wanting to increase production to ease triple-digit oil prices following the conflagration in parts of North Africa and the Middle East during the Arab Spring.

Analysts expect higher USA output to offset supply curbs by the Organization of the Petroleum Exporting Countries, which have been in place for 18 months and have pushed up prices significantly over the a year ago.

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Even as OPEC trims output, production from non-OPEC members, including the United States and Russian Federation, is rising.

Brent crude futures were trading at US$76.55 a barrel at 0547 GMT, up 9 cents, or 0.1%, on their last close.

Consultancy Energy Aspects said Gulf OPEC members would likely add less than 1 million bpd immediately, rising to about 1.5 million bpd in three to six months.

Non-OPEC supply for 2018 is expected to grow 1.86 million b/d from 2017 to 59.75 million b/d, OPEC said, a 130,000 b/d upward revision from last month's estimate.

OPEC says that In 2017, demand for OPEC crude is estimated to stand at 33.1 mb/d, which is 0.7 mb/d higher than a year earlier. But the kingdom said it boosted output by 161,400 bpd to just above 10 million bpd, according to its own data.

Ultimately, the only beneficiaries of higher production would be Saudi Arabia and Russian Federation, and to a lesser extent some of the Gulf States like Kuwait and the UAE.

The minister, Jabar al-Luaibi, said that oil prices still require support and stability, and producers "should not over-exaggerate" the oil market's need for more supplies.

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