Iran and Venezuela are now the two key oil supply concerns globally that supported the oil price rally in recent weeks, before Saudi Arabia and Russian Federation hinted at discussions that they were considering reversing some of the cuts to offset production losses and "ease market and consumer anxiety".
Crude prices ticked up Thursday, as the market refocused on geopolitical risks to supply in Iran and Venezuela ahead of a meeting of major producers later this month.
US crude output hit a record of 10.8 million barrels a day in the week, according to the EIA's weekly report. Rising production has prompted selling since global benchmark Brent LCOc1 climbed above $80 a barrel last month. US oil production is up 1.5 million bpd from a year earlier. U.S. West Texas Intermediate (WTI) crude rose $1.22, or 1.88 percent to $65.95 a barrel.
One of the key features of oil markets recently has been the widening discount of US WTI crude versus Brent CL-LCO1=R , which has nearly quadrupled since February to $11.40 per barrel, its steepest discount since 2015.
OPEC and Russian Federation will meet on June 22 to decide whether to increase production following a fall in global inventories as world demand outstrips supply.
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The producers have been considering a supply increase of up to 1 million barrels per day, sources told Reuters.
Earlier this week, Bloomberg reported that the United States had quietly asked Saudi Arabia and several other OPEC nations to raise oil production by some 1 million bpd.
Three sources have told Reuters Venezuelan state firm PDVSA is considering declaring force majeure on some exports, after plummeting output and tanker bottlenecks at ports.
More generally, Brent has been pushed up by voluntary production cuts led by the Middle East dominated producer cartel of the Organization of the Petroleum Exporting Countries (OPEC) and by top producer Russian Federation, which were put in place in 2017.
"OPEC will not bow and obey" to US pressure to increase oil production, said Hossein Kazempour Ardebili, one of Iran's representatives to the organization.
"If the production ceiling will really be lifted...there will be a renewed pressure on Brent", said Tamas Varga, analyst at brokerage PVM Oil Associates Ltd.
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